If Profits Are Acceptable, a Firm May Elect to Maintain

question 128

Multiple Choice

If profits are acceptable, a firm may elect to maintain or increase its __________ even though profits may not be maximized.

• A)green marketing
• B)sales force
• C)sales
• D)social responsibility
• E)customer satisfaction

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Definitions:

Operating Leverage

A measure of how revenue growth translates into growth in operating income, indicating the proportion of fixed versus variable costs a company has.

ROCE

Return on Capital Employed (ROCE) is a financial ratio that measures a company's profitability in terms of the capital it uses.

ROE

Return on Equity; a measure of financial performance calculated by dividing net income by shareholders' equity, indicating how much profit a company generates with the money shareholders have invested.

Debt

Debt represents money borrowed by one party from another, under the condition that it is to be paid back with interest, typically used for business operations or purchases.