Which of the Following Is NOT a Reason Why a Firm's

question 62

Multiple Choice

Which of the following is NOT a reason why a firm's financial managers must take great care when making investment decisions?

• A) These investment decisions determine whether the firm will add value for its owners.
• B) These investments determine the long-term directions in which the company may move.
• C) These investment decisions determine the corporation's mix of debt and equity.
• D) These investment decisions typically involve substantial costs which must be carefully weighed against their potential benefits.

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Definitions:

Net Profit Margin Percentage

A financial metric that shows the percentage of revenue remaining as net income after all expenses, taxes, and costs have been deducted.

Return on Total Assets

measures a company's efficiency in using its assets to generate profit, calculated by dividing net income by total assets.

Total Assets

The sum of all current and non-current assets owned by a company, including cash, inventory, property, and equipment.

Gross Margin Percentage

A financial metric that represents the gross margin as a percentage of total sales revenue, indicating the efficiency of a company in producing and selling goods.