Unit 1 Flashcards
1
Q
Return on Owner’s investment formula
A
(Net profit / average capital) x100
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
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