Unit 1 Flashcards

1
Q

Return on Owner’s investment formula

A

(Net profit / average capital) x100

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2
Q

What does return on owner’s investment measure

A

A profitability indicator that indicates how effectively a business has used the owner’s capital to earn profit

Key measure from manager’s perspective

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3
Q

High debt ratio implication

A

The higher the debt ratio, the greater the risk that the business will not be able to meet its debts as and continue operation in the long term

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