When Calculating the Rate of Return on Total Assets the Interest

question 46

Multiple Choice

When calculating the rate of return on total assets the interest is added back to profit before tax:

• A) because it must be paid regardless of profits.
• B) because interest rates are variable over time.
• C) to indicate to lenders that some risk is involved.
• D) to reflect the fact that the efficient use of resources should be examined independently from the method of financing.

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