The Rate of Return on Assets Relates the Results of Operating

question 56

Multiple Choice

The rate of return on assets relates the results of operating performance to the investments of a firm without regard to how the firm financed those investments.The ratio is calculated as follows:

• A) \(\frac{\text {Net Income + Interest Expense Net of Income Tax Savings }}{\text {Average Total Assets }}\)
• B) \(\frac{\text { Net Income}}{\text {Average Total Assets }}\)
• C)\(\frac{\text {Net Income + Interest Expense }}{\text {Average Total Assets }}\)
• D)\(\frac{\text {Net Income + Interest Expense Net of Income Tax Savings }}{\text { Ending Total Assets}}\)
• E)\(\frac{\text {Net Income }}{\text { Ending Total Assets}}\)

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Definitions:

Arbitrary Cutoff

A subjective point chosen without any specific criterion or rationale, often in data analysis or reporting.

Electron Orbits

Paths around the nucleus of an atom that electrons follow, determined by the electron's energy level.