Decision makers and analysts look deeply into profitability ratios to identify trends in a company's profitability. Profitability ratios give insights into both the survivability of a company and the benefits that shareholders receive. Identify which of the following statements are true about profitability ratios. Check all that apply. O If a company has a profit margin of 10%, it means that the company earned a net income of $0.10 for each dollar of sales. O If a company's operating margin increases but its profit margin decreases, it could mean that the company paid more in interest or taxes. O An increase in the return on assets ratio implies an increase in the assets a firm owns. O If a company issues new common shares but its net income does not increase, return on common equity will increase.

Decision makers and analysts look deeply into profitability ratios to identify trends in a company's profitability. Profitability ratios give insights into both the survivability of a company and the benefits that shareholders receive. Identify which of the following statements are true about profitability ratios. Check all that apply. O If a company has a profit margin of 10%, it means that the company earned a net income of $0.10 for each dollar of sales. O If a company's operating margin increases but its profit margin decreases, it could mean that the company paid more in interest or taxes. O An increase in the return on assets ratio implies an increase in the assets a firm owns. O If a company issues new common shares but its net income does not increase, return on common equity will increase.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter16: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 21E: Income statements for two different companies in the same industry are as follows: Required: 1....

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