Why Is Interest Added Back to Profit Before Tax When

question 63

Multiple Choice

Why is interest added back to profit before tax when calculating the rate of return on total assets?

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

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Definitions:

Countertransference

A situation where a therapist projects their own unresolved feelings onto a patient, affecting the therapy process.

Neurotransmitters

Chemical messengers that transmit signals across synapses to communicate between neurons and other cells.

Opiates

are a class of drugs naturally derived from the opium poppy plant, often used for their analgesic properties, but can lead to addiction and dependency.

Hyperactivity

is a condition characterized by excessive movement, impulsivity, and difficulty in maintaining attention, often diagnosed as part of Attention Deficit Hyperactivity Disorder (ADHD).