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The profit margin indicates what percentage of sales - Select - represents. It measures the firm's combined impact of operating efficiency and - Select -
The profit margin indicates what percentage of sales
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represents. It measures the firm's combined impact of operating efficiency and
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on the firm's profitability. Its equation is:
The return on total assets ROA measures the return on all the firm's assets
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interest and taxes. Its equation is:
A low ROA can result from a firm's decision to use more debt because high interest expenses will cause net income to
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The basic earning power BEP ratio shows the earning power of the firm's assets
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taxes and debt and is useful for comparing firms with different debt ratios and tax rates. Its equation is:
The return on invested capital ROIC shows the aftertax operating return on total invested capital, which is equal to the sum of debt and equity assuming no preferred stock is issued Its equation is:
The return on common equity ROE measures the return on
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investment. Its equation is:
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