Indicate Whether Each of the Following Statements Is True or False

question 120

Short Answer

Indicate whether each of the following statements is true or false.
Margin is calculated by dividing operating income by net income.______
Turnover is a measure of the profits generated from sales.______
Return on investment can be improved by increasing sales,decreasing expenses,or decreasing the asset base.______
If return on investment increases when sales increase,that change usually is due at least in part to the effect of fixed costs (operating leverage).______
Return on investment blends many aspects of managerial performance into a single ratio.______

---

Definitions:

Financial Leverage

Engaging borrowed assets to increase the anticipated yield from an investment.

Operating Leverage

The degree to which a company uses fixed operating costs, where a higher degree indicates that a small change in sales will have a larger impact on operating income.

Capital Structure

The mix of a company's long-term debt, specific short-term debt, common equity, and preferred equity, which is a significant factor in determining a company's financial health and risk level.

Cost Structure

The composition of fixed and variable costs that a company incurs in the process of producing goods or services.