What Is Primarily Responsible for the Potential Distortion Among the ROA

question 23

Multiple Choice

What is primarily responsible for the potential distortion among the ROA of different firms when net income is used in the numerator of ROA?

• A)firms have different dividend payout ratios.
• B)some firms use fully depreciated assets.
• C)financial leverage varies among firms.
• D)unprofitable firms will not have any tax liability.

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Definitions:

Unions

Organizations formed by workers to collectively negotiate with employers regarding wages, working conditions, and other employment rights and benefits.

Merit Pay

A compensation strategy that rewards employees based on their performance, often used as an incentive for higher productivity and job satisfaction.

Public Sector

The part of the economy composed of both public services and public enterprises, managed and financed by the government.

Piece Rates

A pay system where employees are compensated based on the amount of work completed, such as the number of items produced or tasks finished.