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

Question

Quizplus · Accepted Answer

The earning power of a company is typically defined as the product of its net profit margin (how much profit the company makes for each dollar of sales) and its total asset turnover (how efficiently the company uses its assets to generate sales). This combination reflects how well the company is using its resources to generate profits.

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