The Profit Margin Component of Rate of Return on Investment

question 82

True/False

The profit margin component of rate of return on investment analysis focuses on profitability by indicating the rate of profit earned on each sales dollar.

---

Definitions:

Prepaid Insurance

An asset account that represents insurance payments made in advance and expensed over the coverage period.

Common Stock

Equity ownership in a corporation, representing a share in its assets and earnings.

Dividends

Money disbursed to shareholders from a firm's profits as a profit share.

Salaries Expense

An account that records the total amount paid to employees for services performed during a specific period, excluding wages paid hourly.