Suppose the Margin of 0

question 105

Multiple Choice

Suppose the margin of 0.2 stayed the same and the turnover ratio of 4.0 increased by 10%. What would be the effect on the ROI?

• A) It would decrease by 10%.
• B) It would remain the same.
• C) It would increase by 10%.
• D) It would increase by 15%.

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Definitions:

Stewardship Reporting

The process of reporting on the management and accountability of resources entrusted to one's care, emphasizing the responsibility to safeguard and efficiently use assets.

CICA Handbook

A comprehensive accounting standards guide issued by the Canadian Institute of Chartered Accountants for private sector and not-for-profit organizations.

Encumbrance System

an accounting system used primarily in governmental accounting to record commitments made on future expenditures before they are actually incurred.

Commitments

Obligations that an entity has agreed to fulfill in the future, which can include financial contracts, purchase agreements, or other binding agreements.