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    Asset Turnover, Profitability of a Company, Common & Stock

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    4. Asset turnover calculations:
    a. communicate information about how promptly the entity pays its bills.
    b. should be evaluated by observing the turnover trend over a period of time.
    c. are made by dividing the average asset balance during the year by the sales for the year.
    d. are made by dividing sales for the year by the asset balance at the end of the year.

    5. An individual interested in making a judgment about the profitability of a company should:
    a. review the trend of working capital for several years.
    b. calculate the company's ROI for the most recent year.
    c. compare the company's ROI for the most recent year with the industry average ROI for the most recent year.
    d. review the trend of the company's ROI for several years.

    6. When a corporation has both common stock and preferred stock outstanding:
    a. dividends on preferred stock are paid only if the company has current earnings.
    b. preferred stockholders receive the same dividend per share as common stockholders.
    c. dividends on preferred stock must be paid before dividends on common stock can be paid.
    d. dividends on preferred stock are paid only if dividends are to be paid on the common stock.

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    https://brainmass.com/business/profitability-index/asset-turnover-profitability-company-common-stock-378278

    Solution Preview

    4. b. should be evaluated by observing the turnover trend over a period of time.
    That would tell us about the efficiency in the use ...

    Solution Summary

    The solution discusses the asset turnover, profitability of a company and the preferred stock.

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