ROCE Can Be Decomposed into Three Ratios

question 54

Multiple Choice

ROCE can be decomposed into three ratios. Which of the following is the correct set of ratios?

• A) Gross margin percentage, return on assets, current ratio
• B) Asset turnover, effective tax rate, capital structure leverage
• C) Capital structure leverage, asset turnover, profit margin for ROCE
• D) Asset turnover, Debt to equity ratio, profit margin for ROCE

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Definitions:

Retroactive Interference

A memory phenomenon where new information makes it harder to recall information learned earlier.

Proactive Interference

The phenomenon where old memories hold back an individual from retaining new memories.

Hindsight Bias

The tendency to believe, after an event has occurred, that one would have predicted or expected the outcome, even though it was not predictable.

Hindsight Bias

The inclination to see events that have already occurred as being more predictable than they were before they took place.