Why Is Interest Added Back to Profit Before Tax When

question 45

Multiple Choice

Why is interest added back to profit before tax when calculating return on total assets?

• A)Because interest rates vary over time.
• B)To indicate to lenders that some risk is involved.
• C)Because the efficient use of resources should be examined independently from the method of financing.
• D)Both A and B.

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Definitions:

Simple

Easy to understand or do; not complicated.

Skin Traction

A medical treatment method where bandages or other devices are applied to the skin to apply a pulling force on the bones and muscles beneath.

Buck Extension

A type of traction for the lower leg, used in the treatment of fractures of the femur or after hip surgery, to help maintain proper alignment and reduce pain.

Contractures

Permanent shortening of a muscle or joint, often leading to limited range of motion and stiffness.