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:

Role Ambiguity

Occurs when the expectations and responsibilities of a role are unclear to the individual.

Identifiable Roles

Specific, recognizable functions or positions individuals hold within a group or society, which come with certain expectations and responsibilities.

Collegiality

A principle or practice of cooperation and mutual respect among colleagues, typically within a professional setting, fostering a positive and collaborative work environment.

Communication Patterns

The ways in which information is transmitted and received within a given context, often focusing on interpersonal and organizational communications.