At the End of Year 1,the Following Information Is Available

question 64

Multiple Choice

At the end of Year 1,the following information is available for Grumpy,Happy,and Doc Companies.

-Which of the following ratios would be most useful in evaluating a company's performance from the owners' perspective?

• A)Return-on-assets ratio
• B)Debt-to-assets ratio
• C)Return-on-equity ratio
• D)Either the debt-to-assets ratio or the return-on-equity ratio

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Definitions:

Sales Returns

Goods returned by customers post-purchase, leading to a reversal of sales revenue.

Net Sales

Total revenue from sales minus returns, allowances, and discounts, representing the actual sales revenue earned.

Perpetual Inventory System

An accounting system that records inventory transactions in real time, immediately affecting the inventory account with each purchase or sale.

Gross Method

An accounting method for recording purchases of inventory with no immediate recognition of discounts; discounts taken are recorded as income.