The Following Ratio Relates the Results of Operating Performance to the Investments

question 34

Multiple Choice

The following ratio relates the results of operating performance to the investments (assets) of a firm without regard to how the firm financed those investments. $\frac{\text { Net Income + Interest Expense Net of Income Tax Savings}}{\text {Average Total Assets }}$

The ratio is called a rate of return on:

• A)assets.
• B)long-term investments.
• C)shareholders' equity.
• D)net income.
• E)net income and interest expense net of income tax savings.

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Definitions:

Good Faith

The sincere intention to be fair, open, and honest, regardless of the outcome of an agreement or transaction.

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A court order compelling a party to execute a contract according to its precise terms when monetary compensation is inadequate.

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An artwork created by Pablo Picasso, a Spanish painter and sculptor known for co-founding the Cubist movement.

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