All of the Following Ratios Are Considered Measures of Profitability

question 66

Multiple Choice

All of the following ratios are considered measures of profitability except:

• A)Earnings per share.
• B)Gross profit rate.
• C)Price-earnings ratio.
• D)Return on assets.

---

Definitions:

Fixed Costs

Expenses such as rent, salaries, and insurance that remain constant regardless of the amount of production or sales.

Variable Cost

A cost that varies with the level of output or production volume.

Fixed Costs

Costs that do not change with the level of production or sales, such as rent, salaries, and insurance.

Depreciation

The allocation of the cost of an asset over its useful life, reflecting the reduction in value owing to wear and tear, age, or obsolescence.