A Profitability Ratio Is Defined as a Measure of a Company's

question 73

True/False

A profitability ratio is defined as a measure of a company's ability to generate net income.

Differentiate between the various cost types (variable, fixed, step-wise, and curvilinear).

Learn the definition and application of degree of operating leverage (DOL).

Understand the difference between variable costing and absorption costing, and their applications.

Grasp the concepts of sales mix and its significance in CVP analysis.

---

Definitions:

Financial Leverage

The use of borrowed funds with a fixed cost in order to increase the potential return to shareholders.

Incremental

Relating to or denoting an increase or addition, especially one of a series on a fixed scale.

After-tax Cost

The cost of financing or an expense after accounting for the effects of income tax, often used to compare the true costs of financing options.

Customer Loyalty

The likelihood of repeated business from a customer demonstrated by their repeat purchases or preference for a business's product or service over competitors.