Relative Profitability Should Be Measured by Dividing a Segment's Market

question 66

True/False

Relative profitability should be measured by dividing a segment's market share by its revenues.

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Definitions:

Cash Equivalent

Short-term, highly liquid investments that are easily convertible to known amounts of cash and close to their maturity.

Certificate of Deposit

A time deposit at a bank or financial institution that offers a fixed interest rate over a specified period.

Capital Acquisitions Ratio

A measure of a company’s ability to finance its investment in fixed assets through net income, indicating how much of the company’s capital is being acquired through profits.

Net Income

The amount of profit remaining after all operating expenses, taxes, and interest are deducted from total revenue.