Return on asset is a term often used to express income earned on capital invested in a business unit. A company’s return on asset increases if Sales increase by the same peso amount as expenses and total assets Sales remain the same and expenses are reduced by the same pace amount the total assets increase Sales decrease by the same peso amount the expenses increase Net profit margin on sales increases by the same percentage as total assets

Return on asset is a term often used to express income earned on capital invested in a business unit. A company’s return on asset increases if Sales increase by the same peso amount as expenses and total assets Sales remain the same and expenses are reduced by the same pace amount the total assets increase Sales decrease by the same peso amount the expenses increase Net profit margin on sales increases by the same percentage as total assets

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter9: Responsibility Accounting And Decentralization

Section: Chapter Questions

Problem 3PB: The income statement comparison for Rush Delivery Company shows the income statement for the current...

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The income statement comparison for Rush Delivery Company shows the income statement for the current and prior year. A. Determine the operating income (loss) (dollars) for each year. B. Determine the operating income (percentage) for each year. C. The company made a strategic decision to invest in additional assets in the current year. These amounts are provided. Using the total assets amounts as the investment base, calculate the ROI. Was the decision to invest additional assets in the company successful? Explain. D. Assuming an 8% cost of capital, calculate the RI for each year. Explain how this compares to your findings in part C.
Return on assets The following data (in millions) were adapted from recent financial statements of Tootsie Roll Industries Inc. (TR): The percent a company adds to its cost of sales to determine selling price is called a markup. What is Tootsie Roll’s markup percent? Round to one decimal place.
Return on asset is a term often used to express income earned on capital invested in a business unit. A company’s return on asset increases if a. Sales increase by the same peso amount as expenses and total assets b. Sales remain the same and expenses are reduced by the same pace amount the total assets increase c. Sales decrease by the same peso amount the expenses increase d. Net profit margin on sales increases by the same percentage as total assets
Profitability Ratios: a. Measure the short-term ability of the company to pay its maturing obligations and to meet unexpected needs for cash. b. Measure the ability of the company to survive over a long period of time. c. Measure the income or operating success of a company for a given period of time.
Asset utilization ratios: A. Are most important to stockholders.B. Measures the company's ability to generate a profit on sales.C. Measure how much cash is available for reinvestment into current assets.D. Relate balance sheet assets to income statement sales.
What does the following scenarios from a two year period tell about a companys profitablity and efficient use of assets: a) profit margin ratio slightly decreases. b) return on total assets increased. c) return on equity increased. d) basic earnings per share increases.
The company’s profitability on each dollar invested in assets is represented by which of the following ratios: a. Profit margin. b. Asset turnover. c. Return on assets. d. Return on equity.
Which one of the following will decrease net working capital? Select one: a. A decrease in accounts payable. b. A sale of inventory at a profit. c. A sale of a fixed asset for cash. d. An increase in accounts receivable. e. An increase in accounts payable.
Please show work and explain answer 7.________ measures the percentage of each sales dollar remaining after all costs and expenses, including interest, taxes, and preferred stock dividends, have been deducted. A) Net profit margin B) Operating profit margin C) Gross profit margin D) Earnings available to common shareholders 8.________ measures the return earned on the common stockholders' investment in the firm. A) Net profit margin B) Price/earnings ratio C) Return on equity D) Return on total assets
Identify which of the following six metrics a through f best completes questions 1 through 3 below. a. Days’ sales uncollected d. Return on total assets b. Accounts receivable turnover e. Total asset turnover c. Working capital f. Profit margin 1. Which two ratios are key components in measuring a company’s operating efficiency? Which ratio summarizes these two components? 2. What measure reflects the difference between current assets and current liabilities? 3. Which two short-term liquidity ratios measure how frequently a company collects its accounts?
Which of the following is NOT true about the working capital turnover a) Its formula is Net Sales / average working capitalb) It shows how fast the current assets are converted from cash to inventories ,to receivables and back to cash againc) Its formula is Net Sales / average current assetsd) It shows how fast the current assets are sold
Indicate the effects of the transactions listed, on current assets, current ratios and net income. Use (increase) to indicate an increase, (decrease) to indicate a decrease and (no effect) to indicate no effect or an indeterminate effect. A fixed asset is sold for more than book value. Net income will ______ Answer 1 A fully depreciated asset is retired. Net income will experience ______ An increase in inventory turnover ratio signifies _____________________ in a firm's efficiency. Merchandise is sold for cash. Total current assets will ________