The earning power of a company can be defined as the product of 2 factors
A)total asset turnover and earnings per share.
B)net profit margin fixed asset turnover
C)fixed asset turnover and cash flow per share.
D)net profit margin and total asset turnover.

Question

Quizplus · Accepted Answer

The earning power of a company is best measured by the profitability and efficiency of its operations. Net profit margin measures the percentage of revenue that is left after all expenses are paid, indicating the company's profitability. Total asset turnover measures how efficiently the company uses its assets to generate revenue. Multiplied together, these factors provide a better understanding of the company's overall earning power. Therefore, the best choice is D, net profit margin and total asset turnover.

The Earning Power of a Company Can Be Defined as the Product