Which Ratio Measures the Operating Return on the Firm's Assets

question 103

Multiple Choice

Which ratio measures the operating return on the firm's assets irrespective of financial leverage and taxes?

• A) basic earning power ratio
• B) profit margin
• C) return on assets
• D) operating leverage return

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Definitions:

Balance Sheet

A record presenting a business's holdings, obligations, and investor equity at a distinct time.

Unclassified Balance Sheet

A simple format of a balance sheet where assets, liabilities, and equity are listed in a single column without categorizing them into subcategories.

Accounts

Accounts refer to the records of financial transactions, reflecting credits and debits in the financial statements of a business or an individual.

General Ledger

A complete record of all the financial transactions of a company, organized by accounts, which provides the data used to create financial statements.