return ratios
market value ratios
marginal ratios
equity ratios
Answer is Right!
Answer is Wrong!
The correct answer is: A. return ratios.
Return ratios are a type of financial ratio that measures the profitability of a company. They are calculated by dividing a company’s net income by its assets, equity, or sales. Return ratios can be used to compare the profitability of different companies or to track a company’s profitability over time.
There are many different types of return ratios, but some of the most common include:
- Return on assets (ROA): This ratio measures how profitable a company is for each dollar of assets it owns. It is calculated by dividing net income by total assets.
- Return on equity (ROE): This ratio measures how profitable a company is for each dollar of equity it owns. It is calculated by dividing net income by total equity.
- Return on sales (ROS): This ratio measures how profitable a company is for each dollar of sales it generates. It is calculated by dividing net income by total sales.
Return ratios are an important tool for investors and analysts. They can be used to identify companies that are likely to be profitable in the future. They can also be used to compare the performance of different companies in the same industry.
Here is a brief explanation of each of the other options:
- Market value ratios: These ratios measure the relationship between a company’s stock price and its financial performance. They are calculated by dividing a company’s stock price by its earnings per share, book value per share, or sales per share. Market value ratios can be used to compare the valuation of different companies or to track a company’s valuation over time.
- Marginal ratios: These ratios measure the change in a company’s income or expenses in response to a change in its sales. They are calculated by dividing the change in income or expenses by the change in sales. Marginal ratios can be used to identify the factors that are most important to a company’s profitability.
- Equity ratios: These ratios measure the amount of debt a company has relative to its equity. They are calculated by dividing a company’s total debt by its total equity. Equity ratios can be used to assess a company’s financial risk.