Profitability Ratios Measure How Efficiently a Firm Uses Its Assets

question 85

True/False

Profitability ratios measure how efficiently a firm uses its assets to generate $1 of sales.

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Definitions:

Office Building

A structure designed exclusively for commercial, administrative, or professional operations, housing multiple offices.

Adjusting Entry

An accounting entry made in the general ledger at the end of an accounting period to allocate income and expenditure to the correct periods.

Depreciation

The systematic allocation of the cost of a tangible asset over its useful life, reflecting the decrease in value due to usage, wear and tear, or obsolescence.

Office Equipment

Tangible assets such as desks, computers, and printers used in the operations of an office.