Which of the Following Variables Indicates a Measure of Cumulative

question 35

Multiple Choice

Which of the following variables indicates a measure of cumulative profitability over time?

• A)Retained earnings (balance sheet)/total assets
• B)Earnings before interest and taxes/total assets
• C)Working capital/total assets
• D)Market value of equity/book value of total debt
• E)Sales/total assets

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Definitions:

Marginal Product

The increase in output that results from employing one more unit of a particular input, holding all other inputs constant.

Explicit Costs

Direct, out-of-pocket expenses paid by firms for inputs to production, such as wages, rent, and materials, as opposed to implicit costs which are not directly paid out in cash.

Implicit Costs

The opportunity costs that are not directly paid for or incurred during the production of a good or service.

Average Total Cost

The complete expenditure of manufacturing (incorporating steady and fluctuating expenses) divided by the aggregate volume of goods produced.