Which of the Following Ratios Would Probably Not Be Used

question 5

Multiple Choice

Which of the following ratios would probably not be used to assess the profitability of a firm?

• A)Return on stockholders' equity
• B)Return on total assets
• C)Times interest earned
• D)a and c only

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Definitions:

Machine-Hours

A measure of the amount of time that machinery is in operation, typically used as a basis for allocating manufacturing overhead costs.

Predetermined Overhead Rate

A rate used to allocate manufacturing overhead costs to products based on a predetermined formula, often involving estimated costs and activity levels.

Machine-Hours

A measure of production volume or activity based on the number of hours machines are operating.

Unused Capacity

Unused capacity represents the available but unutilized production or service capability of a company, which if used, could potentially increase output without increasing fixed costs.