If Management Wishes to Evaluate the Ability of a Business

question 105

Multiple Choice

If management wishes to evaluate the ability of a business to provide funding to cover the operating expenses,they could use the:

• A)rate of return on total assets.
• B)rate of return on common stockholders' equity.
• C)gross profit rate.
• D)times interest earned.

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Definitions:

Fixed Cost

Costs that remain constant regardless of the amount of goods produced or sold, like lease payments, employee wages, and insurance fees.

Expansion Options

Strategic choices available to a business to increase its size, offerings, or operational capacity.

Minimizes Cost

The process or approach aimed at reducing expenses and spending to the lowest possible level.