Which of the Following Ratios Indicates the Percentage of Each

question 8

Multiple Choice

Which of the following ratios indicates the percentage of each sales dollar that is available to cover fixed costs and to provide a profit?

• A)margin of safety ratio
• B)contribution margin ratio
• C)costs and expenses ratio
• D)profit ratio

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Definitions:

Required Return

The minimum amount of profit an investor expects to achieve from an investment, considering its risk.

Net Present Value

The difference between the present value of cash inflows and the present value of cash outflows over a period of time, used in capital budgeting to analyze the profitability of an investment or project.

Net Present Value

A calculation used in finance that measures the profitability of an investment by summing the present values of its cash flows minus initial investment.

Initial Investment

The initial amount of money put into a project or venture to start its operations.