The Only Way a Company Can Increase Its Operating Profits

question 58

True/False

The only way a company can increase its operating profits per asset dollar is to expand the amount of sales generated from each asset dollar.

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Definitions:

Realized Gains

Profits that are recognized when assets are sold for a price higher than their book value.

Equity Method

is an accounting technique used to record investments in associated companies where the investor has significant influence but not full control.

Cost Method

An accounting method used to value holdings in another company at the cost of acquisition plus any additional costs incurred.

Carrying Amount

The value at which an asset is recognized on the balance sheet after deducting any accumulated depreciation and impairment losses.