Which of the Following Could Cause Return on Assets to Decline

question 10

Multiple Choice

Which of the following could cause return on assets to decline when net profit margin is increasing?

• A) sale of investments at year-end
• B) increased turnover of operating assets
• C) decline in book value
• D) a stock split
• E) purchase of a new building at year-end

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Definitions:

Uncertainty

A condition characterized by a lack of sufficient knowledge, making it difficult to precisely identify the current situation, predict future events, or acknowledge multiple potential outcomes.

Outdated Costing System

A costing system that no longer accurately reflects the current production operations or costs, leading to misinformed pricing or investment decisions.

Profit Margins

The percentage of revenue that remains as profit after all expenses have been deducted from sales.

Special Product Cost Projects

Involves the detailed analysis and calculation of costs associated with creating a product that is unique or outside the standard product line.