Financial Statement Analysis Chapter
8 Exam with Verified Detailed Answers
Net Profit Margin -
correct answer ✅Reflects net income dollars generated by each
dollar of sales
Net Profit Margin = Net income (Before non controlling interest,
equity income, and nonrecurring items) / Net Sales
Total Asset Turnover -
correct answer ✅Measures the activity of the assets and the
ability of the firm to generate sales through the use of the assets
Total Asset Turnover = Net Sales/Average Total Assets
Return on Assets -
correct answer ✅Measures the ability to utilize assets to create
profits
Average Total Assets
-Internal uses month-end amounts
-External analysis uses beginning and ending amounts
Return on Assets = Net income (Before noncontrolling interest and
nonrecurring items) / Average total assets
8 Exam with Verified Detailed Answers
Net Profit Margin -
correct answer ✅Reflects net income dollars generated by each
dollar of sales
Net Profit Margin = Net income (Before non controlling interest,
equity income, and nonrecurring items) / Net Sales
Total Asset Turnover -
correct answer ✅Measures the activity of the assets and the
ability of the firm to generate sales through the use of the assets
Total Asset Turnover = Net Sales/Average Total Assets
Return on Assets -
correct answer ✅Measures the ability to utilize assets to create
profits
Average Total Assets
-Internal uses month-end amounts
-External analysis uses beginning and ending amounts
Return on Assets = Net income (Before noncontrolling interest and
nonrecurring items) / Average total assets
