The formula such as, net income available for common stockholders divided by total assets is used to calculate __________?
Correct answer: C. return on total assets
- A. return on debt
- B. return on total equity
- C. return on total assets
- D. return on sales
Explanation
Dividing net income available to common stockholders by total assets gives return on total assets, also called return on assets. Return on equity would require common stockholders’ equity as the denominator.
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Business finance explains how organisations plan, obtain and use money while balancing risk, return and liquidity. Topics include financial statements, time value of money, budgeting, working capital, capital structure, sources of finance, investment appraisal and cost of capital. Capital budgeting evaluates long-term projects, whereas working capital manages day-to-day operations.
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