An Investor Wanting Large Returns Will Be Interested in Companies

question 23

Multiple Choice

An investor wanting large returns will be interested in companies that have

• A) high ROAs.
• B) high ROEs.
• C) high current ratios.
• D) high times interest earned.

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Definitions:

Unit Fixed

This specifies a cost or charge that remains constant per unit regardless of changes in the level of activity or volume of production.

Costs

Costs refer to the expenditures incurred by a business in the process of generating revenues.

Unit Contribution Margin

The difference between the selling price per unit and the variable cost per unit.

Fixed Costs

Expenses that remain constant regardless of the amount of production or sales, including rent, wages, and insurance premiums.