Which of the Following Is NOT Correct Regarding the Rate

question 39

Multiple Choice

Which of the following is NOT correct regarding the rate of return on assets?

• A) The rate of return on assets measures management's ability to productively employ all its resources.
• B) The rate of return on assets measures the return on all assets used regardless of how the assets are financed.
• C) The rate of return on assets is a measure of profitability.
• D) The rate of return on assets measures the return on the investment made by the owners of the entity.

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Definitions:

Equity

The value of an owner's interest in a company, calculated as the difference between the assets and liabilities on a company's balance sheet.

Cash Inflows

The total amount of money being received by a company, from operations, investments, and financing activities.

Operating Activities

Transactions and events that affect the net income of a business.

Investing Activities

Deals related to buying and selling assets with a long-term horizon and different kinds of investments, excluding those similar to cash.