A Firm Computes ROA, Profit Margin for ROA, and Total

question 108

Multiple Choice

A firm computes ROA, profit margin for ROA, and total assets turnover for each segment using the segment disclosures.The amounts for these ratios computed at a segment level differ from those at a corporate level for which of the following reason(s) ?

• A)The numerator of ROA at a firm-wide level includes all revenues and expenses except interest expense net of taxes, whereas the numerator of ROA using the segment data includes operating revenues and expenses only.
• B)The denominator of ROA at a firm-wide level is the average of assets at the beginning and end of the year, whereas total assets at the end of the year are used in computing segment ROAs.
• C)The denominator of ROA at a firm-wide level is the total assets at the end of the year, whereas the average of assets at the beginning and end of the year, are used in computing segment ROAs.
• D)choices a and b
• E)choices a and c

---

Definitions:

Demand-Pull

A production strategy where production is based on customer demand, pulling products through the manufacturing process to meet specific orders.

Downstream Workstations

Downstream workstations are the subsequent stages or positions in a workflow or production line where additional processing or assembly takes place, following upstream operations.

Backflush Costing

A simplified accounting approach where production costs are flushed back at the end of a production process, used in just-in-time manufacturing environments.

Conversion Costs

The costs incurred to convert raw materials into finished products, typically including labor and manufacturing overhead.