Which of the Following Assesses a Company's Profitability by Focusing

question 168

Multiple Choice

Which of the following assesses a company's profitability by focusing on the relationship between net income and average common stockholders' equity?

• A)Net profit ratio
• B)Return on equity
• C)Earnings per share
• D)Return on assets

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Definitions:

Wage Rate

The fixed amount of compensation paid to an employee by an employer in exchange for work performed, typically expressed per hour or year.

Purely Competitive

A market situation characterized by a large number of small firms, no barriers to entry or exit, homogenous products, and perfect information among buyers and sellers, leading to the efficient allocation of resources.

Imperfectly Competitive

A market structure where individual sellers have some control over the prices due to lack of perfect competition.

Wage Rate

The amount of compensation a worker receives per unit of time (e.g., hour, day) or per unit of output.