When Assessing the Profitability Ratios of an Organization's Ratios, Which

question 15

Multiple Choice

When assessing the profitability ratios of an organization's ratios, which of the following should be considered?

• A) Assets employed, size of organization
• B) Type of organization
• C) Historical returns
• D) Should earn
• E) All of the above

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Definitions:

Common Stock

Common Stock represents ownership shares in a corporation, giving holders voting rights and a share in the company’s profits via dividends.

Cost Method

An accounting approach where investments are recorded at their acquisition cost, without subsequent change for market value fluctuations.

Liquidated

The process of converting assets into cash or using them to pay off liabilities in the event of a business closure, bankruptcy, or when assets are no longer needed.

Subsidiary Company

A company that is completely or partly owned and partly or wholly controlled by another company, known as the parent company.