Return on investment measures the profitability of an investment center but not the efficiency in using its assets.
True
False
False
Return on investment is indiactor of profitability and also indicates the efficiency of using the fixed assest. It is widely acceptable indicator used in comparison of firms and companies also.
Return on investment measures the profitability of an investment center but not the efficiency in using...
QUESTION 12 Three measures of investment center performance are income from operations, rate of return on investment, and residual income. True False QUESTION 13 If divisional income from operations is $100,000, invested assets are $850,000, and the minimum rate of return on invested assets is 8%, the residual income is $68,000. True False QUESTION 14 A decentralized business organization is one in which all major planning and operating decisions are made by top management True False QUESTION 15 Click Save...
Mastery Problem: Return on Investment, margin, and turnover Return on Investment (ROI) The manager of an investment center should be evaluated based on revenues, costs, and investments. An evaluation based on net income ignores the amount of investment the investment center required. One way to measure operating profit in relation to investment is a calculation called the return on investment. One formula for calculating return on investment is: Operating income Invested Assets ROI is effective because it takes into consideration...
Return on investment can be split into which of the following two measures? Multiple Choice Investment center income and profit margin. Profit margin and net income. Investment center average assets and investment turnover Residual income and operating income. Profit margin and investment turnover
true or false: the coupon rate on a bond measures the investors return on their investment.
Return on common equity measures profitability per dollar of investment for: a. short-term suppliers of funds b. all suppliers of funds c. common stockholders d. all stockholders e. long-term suppliers of funds
Return on assets a. measures overall profitability of total assets b. all are correct c. is a profitability ratio d. is calculated: net income divided by average total assets
Compute return on investment for each of these divisions (each is an investment center). Investment Center Net Income Return on Investment Cameras and camcorders Average Assets $ 20,600,000 14,500,000 18,400,000 4,120,000 2,682,500 2,852,000 Phones and communications Computers and accessories
QUESTION 14 Operating performance measures like Manufacturing Cycle Efficiency (MCE) can help companies get products into the hands of customers more quickly and at a lower cost by identifying and reducing non-value-added activities True O False QUESTION 15 Sunk costs are considered to be avoidable costs. O True O False QUESTION 16 Excessive funds tied up in operating assets (like cash, accounts receivable, inventories, plant and equipment) can reduce turnover and therefore, improve Return on Investment. True O False QUESTION...
The TIE ratio measures the firm’s profitability. True or False ?
Profitability ratios reflect the net result of all the firm's erect. B policies and operating decisions. The profitability ratios include the: (1) Operating profit margin, (2) Net profit margin, (3) Return on total assets (ROA), (4) Basic earning power (BEP) ratio, and (5) Return on common equity (ROE). The operating profit margin indicates what percentage of sales remain after et B are accounted for. It is a measure of the firm's operating effidency. Its equation is: B. It measures the...