Which of the following variables indicates a measure of cumulative profitability over time?
A)Retained earnings (balance sheet)/total assets
B)Earnings before interest and taxes/total assets
C)Working capital/total assets
D)Market value of equity/book value of total debt
E)Sales/total assets

Question

Quizplus · Accepted Answer

Retained earnings on the balance sheet represent the cumulative profits that a company has earned over time and chosen to keep rather than distribute to shareholders as dividends. Dividing by total assets provides a measure of the proportion of profits that have been retained relative to the size of the business.

Which of the Following Variables Indicates a Measure of Cumulative