Indicate Whether Each of the Following Statements About Financial Statement

question 134

True/False

Indicate whether each of the following statements about financial statement analysis is true or false.________ a)The asset turnover ratio is calculated by dividing net income by average total assets.________ b)The asset turnover ratio is likely to be high in an industry in which operations require only a minimal investment in assets.________ c)Return on equity measures the wealth generated by the amount of assets invested in a business.________ d)A higher value for the return on investment ratio would generally indicate more effective company management.________ e)The use of financial leverage often causes a business's return on equity to be lower than its return on investment.

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Definitions:

Supply Curve

A graphical representation showing the relationship between the price of a good or service and the quantity supplied for a given period.

Variable Costs

Costs that vary directly with the level of production or service provision, such as materials and labor.

Output

The quantity of goods or services produced by a firm or industry.

Total Variable Costs

The sum of expenses that change in proportion to the activity of a business, such as costs for raw materials and labor, which vary with production volume.