Which of the Following Is the Correct Formula for Calculating

question 187

Multiple Choice

Which of the following is the correct formula for calculating rate of return on total assets?

• A) (Net income + Interest expense) / Average total assets
• B) (Net income - Interest expense) / Average total asset
• C) (Net income - Interest expense) / Total assets
• D) Total equity / Total assets

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Definitions:

Surrenders Control

In accounting or finance, refers to the act of a party giving up the authority or power over an asset or decision-making to another party.

Securitization

The financial process of pooling various types of contractual debt, such as mortgages or loans, and selling them as consolidated financial instruments to investors.

Securities Not Collateralized

Financial instruments or investments that are not backed by a physical asset or security, making them potentially riskier for investors since there is no guarantee of repayment through asset seizure.

Factoring

A financial transaction where a business sells its accounts receivable to a third party (the factor) at a discount, in order to receive immediate cash.