Which Mechanism Is Used to Motivate Managers to Act in the Shareholder's

question 47

Multiple Choice

Which mechanism is used to motivate managers to act in the shareholder's best interest?

• A) threat of firing
• B) threat of takeover
• C) managerial compensation plans
• D) All of the above

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Definitions:

Return on Assets Ratio

A financial ratio indicating how Profitable a company is relative to its total assets, measuring how efficiently a company is using its assets to generate profit.

Net Profit Margin Ratio

A financial metric that shows the percentage of net income to sales revenue, indicating how much profit each dollar of sales generates.

Total Asset Turnover Ratio

An economic indicator that evaluates how effectively a business utilizes its assets to produce sales income.

Return on Assets Ratio

A financial metric indicating how profitable a company is relative to its total assets, calculated by dividing net income by total assets.