Examlex

Solved

Which of the Following Functional Area Ratios Determines a Company's

question 108

Multiple Choice

Which of the following functional area ratios determines a company's ability to pay short-term debt?


Definitions:

Investment Center

A business unit or segment that is responsible for its own revenues, expenses, and investments, and its performance is measured by its return on investment (ROI).

Return On Investment

A measure used to evaluate the efficiency or profitability of an investment, calculated by dividing the profit from an investment by the cost of the investment.

Residual Income

The amount of income that an individual has after all personal debts, including the mortgage, have been paid. In a corporate context, it's the profit remaining after deducting the cost of capital.

DuPont Formula

A formula that breaks down Return on Equity into three parts: profitability, operating efficiency, and financial leverage, to analyze a company's financial health.

Related Questions