According to the Financial Model of Return on Net Worth

question 60

Multiple Choice

According to the financial model of return on net worth, return on assets times (×) financial leverage equals (=)

• A) profit margin.
• B) sales expenses.
• C) asset turnover.
• D) the acid test ratio.
• E) rate of return on net worth.

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Definitions:

Business Transaction

An economic event that involves the exchange of goods, services, money, or assets between two or more parties that is recorded and has a financial impact.

Sequence

A specific order in which related events, movements, or things follow each other.

Liability Account

An accounting record that captures the amounts a company owes to others, including loans, payables, and other financial obligations.

Capital Account

An account on a national level that records transactions of assets, liabilities, and investments between domestic and foreign entities.