For a Given Incremental Increase in Revenue from Each of the Following

question 13

Multiple Choice

For a given incremental increase in revenue from each of the following sources of growth,which source would generally create the most shareholder value?

• A)Reducing costs.
• B)Acquiring businesses.
• C)Expanding an existing market.
• D)Introducing new products to market.

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Definitions:

Return on Equity

A financial ratio that measures the profitability of a business in relation to shareholders' equity.

Profit Margin

A financial ratio that shows the percentage of revenue remaining after all operating expenses, interest, taxes, and dividends have been deducted.

Return on Assets

A financial ratio indicating how efficiently a company is using its assets to generate earnings.

Return on Assets

A financial ratio indicating how profitable a company is relative to its total assets, measuring the efficiency of asset use in generating profit.