Question

In: Accounting

1. Which of the following is considered the better measures of profitability? a. Gross profit margin...

1. Which of the following is considered the better measures of profitability?
a. Gross profit margin
b. Operating profit margin
c. Net profit margin
d. Sales
e. None of the above

2. Which of the following allows for comparisons across companies on a “per unit” bases using a common denominator?
a. Current ratio
b. Inventory turnover
c. Long- term debt ratio
d.Earrings per share
E. None of the above

3. Which of the following compares form of financing assets?
a. Debt ratio
b.cash ratio
C. Debt to equity ratio
d. Common stock ratio
e. None of the above.

Solutions

Expert Solution

Answer 1: Your required answer is option C i.e. Net Profit Margin

Explanation:

Net profit margin is considered is best measure of profitability however return on equity is also best measure of profitability and net margin is calculated as:

Answer 2: Your required answer is option D i.e. Earning Per Share

Explanation:

Earning per share allows two or more companies to compare with each other by using common denominator it is calculated as:

Answer 3: Your required answer is option C i.e. Debt to Equity Ratio

Explanation:

Debt equity ratio is used to compare form of financing assets and it is calculate as:

I hope this clear your doubt.

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