Which of the Following Ratios Can Managers Use to Break

question 41

Multiple Choice

Which of the following ratios can managers use to break down return on investment (ROI) for improving performance?

• A)Inventory turnover and gross margin ratio.
• B)Inventory turnover and profit margin ratio.
• C)Operating profit margin and EVA.
• D)Operating profit margin and asset turnover.
• E)None of the answer choices is correct.

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Definitions:

Flotation Costs

Expenses incurred by a company in issuing new securities, typically including fees for underwriting, legal, registration, and other associated costs.

Debt-to-Assets Ratio

A leverage ratio that calculates the total amount of debt relative to the total amount of assets, indicating how much of the company's assets are funded by debt.

Cost of Equity

The rate of return that a company theoretically pays to its equity investors to compensate for the risk they undertake by investing in the company.

Cost of Equity

The return that investors expect for investing in a company's equity, considered the cost of equity capital.