Return on Assets Is Defined As

question 11

Multiple Choice

Return on assets is defined as:

• A) Sales divided by net fixed assets.
• B) EBIT divided by net fixed assets.
• C) Net income divided by net fixed assets.
• D) EBIT divided by total assets.
• E) Net income divided by total assets.

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Definitions:

Taxable Income

The amount of income that is used to calculate how much tax an individual or a company owes to the government.

Retained Earnings

The portion of net income that is not distributed to shareholders as dividends but is kept by the company to be reinvested in its core business or to pay debt.

Capital Budgeting

The process of evaluating and selecting long-term investments that are consistent with the firm's goal of maximizing owner wealth.

Cost of Capital

The rate of return that a company must achieve in order to justify the cost of an investment or project.