The Rate of Return on Total Assets and the Rate

question 147

Multiple Choice

The rate of return on total assets and the rate of return on common stockholders' equity are used to evaluate the:

• A) profitability of the business.
• B) liquidity of the business.
• C) ability to pay current liabilities with current assets.
• D) cash flow of the business.

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Definitions:

Revenue

The total amount of income generated by the sale of goods or services related to a company's primary operations.

Permanent Accounts

Accounts on the balance sheet that carry over their ending balances into the next financial period, such as assets, liabilities, and equity accounts.

Assets and Liabilities

Essential components of a financial statement, with assets representing what a company owns and liabilities what it owes.