Principles of Accounting Volume 2
19th Edition
ISBN: 9781947172609
Author: OpenStax
Publisher: OpenStax College
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Textbook Question
Chapter 12, Problem 13MC
Which of the following measures the profitability of a division relative to the size of its investment in capital assets?
A. residual Income (RI)
B. sales margin
C.
D. economic value added (EVA)
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Students have asked these similar questions
Discuss the following profitability ratios: Profit Margin, ROA-Return on Assets, ROI-Return on Investment, and the Gross Margin.
Why is the operating return on assets ratio also referred to as the operating returnon investment?
Which of the following is an appropriate computation for return on investment?
a.
Sales divided by total assets
b.
Net income divided by total assets
c.
Net income divided by sales
d.
Sales divided by stockholders' equity
would b be the right answer?
Chapter 12 Solutions
Principles of Accounting Volume 2
Ch. 12 - Components of the organization that are...Ch. 12 - When managerial accountants design an evaluation...Ch. 12 - Goal congruence in well-designed performance...Ch. 12 - Responsibility accounting holds managers...Ch. 12 - Performance measures are only useful if _______....Ch. 12 - Which of the following is not a characteristic of...Ch. 12 - A good performance measurement system will align...Ch. 12 - What should an organization do if performance...Ch. 12 - A good performance measurement system will include...Ch. 12 - Without proper performance measures, goal...
Ch. 12 - Dixon Construction Materials has collected this...Ch. 12 - The cost of equity is _______. A. the interest...Ch. 12 - Which of the following measures the profitability...Ch. 12 - The capital structure of Ridley Enterprises Is:...Ch. 12 - Calculate the ROI for Gardner Chemical given the...Ch. 12 - Which of the following statements is false? A. The...Ch. 12 - The metrics based on nonfinancial information are...Ch. 12 - The metrics based on financial numbers produced by...Ch. 12 - People affected by decisions made by a company,...Ch. 12 - The owners of company stock are ______. A....Ch. 12 - Why might a manager focused solely on accounting...Ch. 12 - Is there a way to prevent managers from focusing...Ch. 12 - Should an organization focus on controllable or...Ch. 12 - What are the components of a strategic plan? Find...Ch. 12 - What are the four types of centers and their...Ch. 12 - What would be wrong with using two points of data...Ch. 12 - Compare and contrast short- and long-term goals...Ch. 12 - Can a short-term goal also be a long-term goal?...Ch. 12 - What does goal congruence mean? Provide an example...Ch. 12 - What are the six characteristics of a good...Ch. 12 - What is EVA and why is it superior to other...Ch. 12 - What are the drawbacks to ROI? Give examples of...Ch. 12 - Describe the history and purpose of the balanced...Ch. 12 - What are the characteristics of successful...Ch. 12 - For the following situations, identify whether the...Ch. 12 - For the following descriptions state whether the...Ch. 12 - Identify the type of responsibility center...Ch. 12 - Sara has just taken a job as the middle school...Ch. 12 - During the current year, Sokowski Manufacturing...Ch. 12 - During the current year, Sokowski Manufacturing...Ch. 12 - Assume Skyler Industries has debt of $4,500,000...Ch. 12 - Why do managers want a high ROI, and how would...Ch. 12 - Classify each of the following performance...Ch. 12 - For the following situations identify whether the...Ch. 12 - For the following descriptions, state whether the...Ch. 12 - Identify the type of responsibility center...Ch. 12 - Padma completed her doctoral degree and has taken...Ch. 12 - During the current year. Plainfield Manufacturing...Ch. 12 - During the current year, Plainfield Manufacturing...Ch. 12 - Assume Plainfield Manufacturing has debt of...Ch. 12 - Though a high ROI is desired, what are some...Ch. 12 - Classify each of the following performance...Ch. 12 - Match each of the following with its appropriate...Ch. 12 - Florentino Allers is the production manager of...Ch. 12 - Macon Mills is a division of Bolin Products. Inc....Ch. 12 - Jefferson Memorial Hospital is an investment...Ch. 12 - Crawfords Books and Things has a traditional...Ch. 12 - Coral Creations has strategic plans that call for...Ch. 12 - Match each of the following with its appropriate...Ch. 12 - Oleg Markov is the production manager of NASA...Ch. 12 - Evaluate the two departments for Moxie Products....Ch. 12 - Banyan Industries has two divisions, a tax rate of...Ch. 12 - Forty years ago, Vinfen was founded as a nonprofit...Ch. 12 - What combination of quantitative factors and...Ch. 12 - Josh OShea is the manager of the...Ch. 12 - Kanye Achebe just became the operations manager of...Ch. 12 - Which of the performance measures—ROI, RI, or...
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- A responsibility center structure that considers investments made by the operating segments by using a common cost of capital percentage is called_______. A. return on investment B. residual income C. a profit center D. a discretionary cost centerarrow_forwardIn a DuPont analysis, what are the components of return on assets?a. Net Profit Margin Ratio and Debt Ratiob. Net Profit Margin Ratio and Leverage Ratioc. Net Profit Margin Ratio and Asset Turnover Ratiod. Asset Turnover Ratio and Leverage Ratioarrow_forwardWhich is a measure of the profitability of the core operation? 1.Gross profit ratio 2.interest cover 3.return on capital employed 4.net profit ratioarrow_forward
- how value drivers (Return on Equity, Net Profit Margin, and Total Asset Turnover) are related to financial statement analysis?arrow_forwardWhat concept is critical in distinguishing an enterprise’s return on investment from return of its investment? Capital maintenance concept Current operating performance concept Comprehensive income concept Return on investment conceptarrow_forwardDiscuss the impact of the following ratios and usefulness to users of financial statements. Gross profit Margin Return on capital employed Operating profit (PBIT) percentage Asset turnover Gearing ratioarrow_forward
- The return on total assets measures A. profitability by combining the effects of the profit margin and asset turnover. B.how efficiently a company uses its assets to generate sales. C.efficiency, profitability, and liquidity. D.liquidity.arrow_forwardWhich of the following is NOT a profitability ratio? Select one:a. Return on Equityb. Net Profit Marginc. Return on Assetsd. Average Collection Periodarrow_forwardWhich of the following is NOT one of the ratios in Profitability group? Select one: a. Quick ratio b. Gross profit margin c. Return on Assets d. Operating profit marginarrow_forward
- 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.arrow_forwardWhich of the following measures the number of dollars of sales produced per dollar of fixed assets? Multiple Choice fixed asset to working capital ratio fixed asset turnover ratio fixed asset management ratio sales to working capital ratioarrow_forwardIn the DuPont formula, return on assets equals: Multiple Choice Profit margin on sales x Inventory turnover. Profit margin on sales x Asset turnover. Gross margin on sales x Asset turnover. Gross margin on sales x Inventory turnover.arrow_forward
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