Revenue Per Employee Is a Basic Measure of Human Capital

question 64

True/False

Revenue per employee is a basic measure of human capital effectiveness.

Understand how to calculate and interpret the gross margin ratio.

Identify and understand the components and significance of ending inventory.

Calculate and understand the implications of the current ratio and acid-test ratio for business liquidity.

Understand the calculation and business implications of the acid-test ratio.

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Definitions:

Controlling Influence

The power to govern the financial and operating policies of another entity through ownership, contract, or otherwise, often resulting in a parent-subsidiary relationship.

Parent

A company that controls other companies (subsidiaries) through ownership of more than half their voting stock or by having a significant influence over them.

Equity Method Investments

An accounting technique used to record investments in which the investor has significant influence over the investee but does not control it outright, typically through the ownership of 20% to 50% of the voting stock.

Cash Dividends

A financial distribution in the form of cash from a corporation to its investors as profits.