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:

Inherited Traits

Characteristics or attributes passed down from parents to offspring through genes.

Activity Levels

Describes the overall amount of physical and mental action or engagement displayed by an individual.

Genotype

The genetic form, or constitution, of a person as determined by heredity.

Monozygotic Twins

Twins that are genetically identical, resulting from the division of a single fertilized egg into two.