The Profit Margin Ratio Is Used to Measure Long-Term Solvency

question 67

True/False

The profit margin ratio is used to measure long-term solvency.

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Definitions:

Stockholders' Equity

The owners' claim on the company's assets, calculated as total assets minus total liabilities.

Treasury Stock

Shares of a company's own stock that have been reacquired by the company and held in its treasury.

Issued

When a company distributes or sells new securities, shares, or other financial instruments to investors.

Reacquired

Refers to assets, often shares, that a company buys back from investors or stakeholders.