4. Total asset turnover measures: a. b. c. d. e. Net income dollars generated by

Question

4. Total asset turnover measures: a. b. c. d. e. Net income dollars generated by each dollar of sales Ability of the firm to generate sales through the effective and efficient use of assets Productive and efficient use of property plant and equipment Return to common shareholders None of the above 5. T orF The net profit margin component of the DuPont method measures the ability of management to control expenses as it reflects the net income for each dollar of sales. -6. Return on common equity measures profitability per dollar of investment for: a. All providers of capital b. All shareholders c. Common shareholders d. Preferred shareholders e. Creditors

Explanation / Answer

Asset turnover ratio = Net sales/average total asset

So it indicated the amount of sales every $ of asset generates

So correct option is B.

The statement is correct

Net profit margin = Net income/net sales

It indicated amount of net income every $ of sales generate

Return on common equity measures profitability per dollar of investment for common shareholders only.

Correct answer is C.

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