Which of the Following Ratios Is a Comparison of a Financial

question 1

Multiple Choice

Which of the following ratios is a comparison of a financial statement number to a market value number?

• A) Price-earnings ratio
• B) Return on equity
• C) Return on sales
• D) Debt ratio

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Definitions:

Predetermined Overhead Rate

A rate used to allocate manufacturing overhead costs to products or job orders based on a projected activity level.

General Ledger

The main accounting record of a company that uses double-entry bookkeeping, containing all the financial accounts and statements.

Predetermined Overhead Rate

An estimated overhead rate used to allocate manufacturing overhead costs to products based on a planned activity level.

Direct Labor Cost

The total cost of all the labor that is directly involved in the production of goods or services, including wages and other related expenses.