Two Frequently Cited Ratios of Profitability That Can Be Read

question 36

Multiple Choice

Two frequently cited ratios of profitability that can be read directly from the common-size income statement are ________.

• A) the earnings per share and the return on total assets
• B) the gross profit margin and the earnings per share
• C) the gross profit margin and the return on total assets
• D) the gross profit margin and the net profit margin

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Definitions:

Interest Rate

The percentage of a loan amount charged by a lender to a borrower for the use of assets, which can vary based on factors like inflation, the time value of money, and the risk involved.

Loanable Funds

The market where savers supply funds to borrowers, typically through financial intermediaries.

Quantity Supplied

The total amount of a specific good or service that producers are willing and able to sell at a given price, during a certain time period.

Pension Program

A financial arrangement designed to provide individuals with an income when they are no longer earning a regular income from employment.