The Rate of Return on Total Assets Measures a Company's

question 107

Multiple Choice

The rate of return on total assets measures a company's ________.

• A) ability to meet its short-term obligations
• B) ability to repay its long-term debt
• C) success in using assets to earn income
• D) success in earning high returns on investments in stocks and bonds of other companies

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Definitions:

Marginal Revenue

The increased earnings resulting from the sale of one extra unit of a good or service.

Marginal Cost

The increased cost resulting from the production of an additional unit of a good or service.

Economic Profit

The difference between a firm's total revenues and its total costs, including both explicit and implicit costs, indicating the actual profitability of the company beyond just accounting profit.

Purely Competitive

A market structure characterized by many buyers and sellers, homogeneous products, and no barriers to entry or exit.