Profit is not relevant when calculating:
A) return on equity.
B) price/earnings ratio.
C) earnings per share.
D) accounts receivable turnover.

Question

Quizplus · Accepted Answer

Accounts receivable turnover is a measure of how quickly a company is able to collect payment from its customers and is calculated by dividing net credit sales by the average accounts receivable balance during a period. Profit is not directly involved in this calculation, so it is not relevant. However, return on equity, price/earnings ratio, and earnings per share all rely on a company's profits and therefore would be affected by changes in profit.

Profit Is Not Relevant When Calculating