To Study Changes in ROA, the Analyst Can Disaggregate ROA

question 73

Multiple Choice

To study changes in ROA, the analyst can disaggregate ROA into the product of two other ratios:

• A)the gross profit for ROA ratio and the total assets turnover ratio.
• B)the profit margin for ROA ratio and the inventory turnover ratio
• C)the gross margin for ROA ratio and the inventory turnover ratio.
• D)the profit margin for ROA ratio and the total assets turnover ratio
• E)the gross margin for ROA ratio and the total assets turnover ratio.

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Definitions:

Activity Changes

Fluctuations or variations in the operations of a business that can affect its financial performance and necessitate managerial adjustments.

Total Variable Cost

The aggregate of all costs that vary with the level of output, including materials, labor, and other expenses directly tied to the production volume.

High-Low Method

A technique that uses the highest and lowest total costs as a basis for estimating the variable cost per unit and the fixed cost component of a mixed cost.

Productive Month

A period during which a company or individual achieves significant production or operational outcomes relative to goals.