How Is Income from Operations Determined

question 87

Multiple Choice

How is income from operations determined?

• A)By subtracting the cost of goods sold from sales
• B)By subtracting the total operating expenses from sales
• C)By subtracting the total operating expenses from gross profit
• D)By subtracting selling expenses from operating revenues

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Definitions:

Required Return

The expected return that investors seek from an investment, considering its risk level and the opportunity cost of forgoing other investments.

Profitability Index

A calculation that determines the relative profitability of an investment, expressed as the ratio of the present value of future cash flows over the initial investment cost.

Internal Rate Of Return

In financial evaluation, it's a measure used to assess the profitability of forthcoming investments, identified by the yield rate that renders the net present value of the project's cash flows neutral.

Required Rate Of Return

The minimum annual percentage return an investor expects to achieve by investing in a particular asset.