How Many of These Ratios Measure the Adequacy of Profits

question 43

Multiple Choice

How many of these ratios measure the adequacy of profits?
.Profit before interest and finance costs/ finance costs
.Profit compared to total assets
.Profit compared to sales
.Profit compared to equity

• A)1
• B)2
• C)3
• D)4

Understand the criteria for determining significant influence over an investee.

Comprehend the accounting treatment for associate entities, including equity method accounting.

Recognize the financial statement presentation and disclosure requirements for investments.

Apply the concepts related to unrealized profits and inventory write-downs in inter-company transactions.

---

Definitions:

Unconsummated Transaction

A transaction that has been initiated but not completed or finalized, often due to unmet conditions or mutual agreement.

Tax

A compulsory financial charge or some other type of levy imposed upon a taxpayer by a governmental organization.

Unconsummated Transaction

A trade or deal that has been agreed upon in principle but has not been finalized or executed.

Levied

The act of imposing a tax, fee, or fine.