The Difference Between the Budget Targets Managers Ask For, and What

question 37

True/False

The difference between the budget targets managers ask for, and what they actually think they can achieve, is called "earnings management."

---

Definitions:

ROA

Return on Assets, a financial ratio indicating the profitability of a company relative to its total assets, measuring how effectively the company is using its assets to generate earnings.

Debt-Equity Ratio

The indicator displaying the equivalent contribution of equity and debt to a company's asset base financing.

Sustainable Growth Rate

The maximum rate at which a company can grow its revenues and profits without needing to increase financial leverage.

Debt-Equity Ratio

An indicator of a firm's use of financial debt, found by dividing the total amount of liabilities by the equity owned by stockholders.