When Considering the Difference Between Return on Net Operating Assets

question 73

Multiple Choice

When considering the difference between return on net operating assets (RNOA) and return on common shareholders' equity (ROCE) , which of the following statements is incorrect?

• A)Preferred dividends are deducted from the numerator when calculating ROCE but not when calculating RNOA.
• B)RNOA is a pre-interest measure but ROCE is not.
• C)RNOA is a post-interest measure but ROCE is not.
• D)RNOA is independent of the form of financing but ROCE is not.

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Definitions:

Deviated Specifications

Instances where the actual specifications of a product or service differ from the initially agreed or standard specifications.

Contract Price

Contract price is the total financial cost agreed upon by all parties for the execution of the terms of a contract.

Usable Barn

A structure that is in a suitable condition for storage or housing of agricultural equipment, livestock, or farm produce.

Condition Precedent

A contractual clause requiring certain conditions to be fulfilled before a contract becomes effective or an obligation is to be performed.