The Return on Investment Measure of Performance

question 28

Multiple Choice

The return on investment measure of performance:

• A)is never as important a measure of management effectiveness as the amount of net income.
• B)relates dividends paid to the entity's assets.
• C)is calculated using net income as the amount of return.
• D)is calculated by dividing average assets for a period by the amount of net income for the period.

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Definitions:

Marginal Tax Rate

The rate at which the last dollar of a person’s income is taxed, reflecting the percentage of additional income that is taken in taxes.

Financial Distress

A situation where a company or individual cannot generate enough revenue or income to cover operating expenses or financial obligations.

Static Theory

A theory that analyzes economic variables without considering changes over time.

Business Risk

Business risk pertains to the potential for loss that a business faces from factors affecting its profitability or operational success, such as market competition and demand fluctuations.