From the Viewpoint of a Stockholder, Which of the Following

question 14

Multiple Choice

From the viewpoint of a stockholder, which of the following relationships do you consider of least significance?

• A) The return on assets consistently is higher than the industry average.
• B) The return on equity has increased in each of the past five years.
• C) Net income is greater than the amount of working capital.
• D) The return on assets is greater than the rate of interest being paid to creditors.

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Definitions:

Note Payable

A written promise to pay a specified amount of money, usually with interest, at a future date.

Account Payable

An account payable is a liability representing an amount owed by an entity to a supplier or creditor for goods or services received but not yet paid for.

Return on Assets Ratio

The Return on Assets Ratio measures a company's ability to generate earnings from its assets, calculated by dividing net income by the average total assets.

Interest Expense

The cost incurred by an entity for borrowed funds, reflecting the interest payments due on any type of debt.