Select the Correct Statement from the Following

question 153

Multiple Choice

Select the correct statement from the following:

• A) Profit margin reflects a company's ability to produce net sales from total assets.
• B) Total asset turnover reflects the percent of net income in each dollar of net sales.
• C) Return on total assets can be separated into gross margin ratio and price-earnings ratio.
• D) High returns on total assets are desirable.
• E) Return on total assets analysis is beneficial in evaluating a company but is not useful for competitor analysis.

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Definitions:

Assigning

The process of allocating or designating resources, tasks, responsibilities, or rights to specific entities or persons within the context of business or legal proceedings.

Pledging

Pledging involves using assets as collateral to secure a loan or obligation, ensuring the lender or party has a claim to the asset if the borrower defaults.

Allowance for Doubtful Accounts

A contra-asset account that reduces the total accounts receivable on the balance sheet to reflect the amount that is expected to go uncollected.

Credit Sales

Sales in which the customer is allowed to pay at a later date, typically used to increase business by offering clients flexible payment terms.