Which of the Following Is True Regarding the Calculation of Return

question 32

Multiple Choice

Which of the following is true regarding the calculation of return on total assets?

• A) The numerator of the ratio consists only of net income.
• B) The denominator of the ratio consists of the balance of total assets at the end of the period under consideration.
• C) The numerator of the ratio consists of net income plus interest expense times the tax rate.
• D) The numerator of the ratio consists of net income plus interest expense times one minus the tax rate.

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Definitions:

Working Capital Management

The managing of short-term assets and liabilities.

Current Assets

Assets that are used or converted into cash within the course of a calendar year.

Financial Managers

Those who focus on obtaining needed funds for the successful operation of an organization and using those funds to further organizational goals.