To Study Changes in ROA, the Analyst Can Disaggregate ROA

question 20

True/False

To study changes in ROA, the analyst can disaggregate ROA into the product of two other ratios: the profit margin for ROA ratio and the total assets turnover ratio.

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Definitions:

Treasury Stock

Shares once issued to the public but then re-obtained by the originating company, lessening the quantity of stock present in the marketplace.

Common Stock

Equity security that represents ownership in a corporation, giving holders the right to vote and share in the company's profits.

Retained Earnings

Profits that are not distributed as dividends but are instead reinvested into the business.

Net Income

Net Income is the total earnings of a company after subtracting all expenses, taxes, and costs from its total revenue.