The Ratio of Sales to Invested Assets,which Is Also a Factor

question 51

Multiple Choice

The ratio of sales to invested assets,which is also a factor in the DuPont formula for determing the rate of return on investment,is called

• A) profit margin
• B) indirect margin
• C) investment turnover
• D) cost ratio

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Definitions:

Cost Concept

An accounting principle that dictates that all assets are recorded and reported at their original purchase cost rather than their current market value.

Owner's Equity

The residual interest in the assets of a business after all liabilities have been deducted, often referred to as net assets or shareholder equity.

Assets

Resources owned by a business with future economic benefits.

Investments

The balance sheet caption used to report long-term investments in stocks not intended as a source of cash in the normal operations of the business.