- CFA Exams
- CFA Level I Exam
- Topic 4. Financial Statement Analysis
- Learning Module 11. Financial Analysis Techniques
- Subject 5. Profitability Ratios
CFA Practice Question
Which of the following is not a measure of profitability?
B. Interest coverage ratio
C. Operating income
D. Operating expense ratio
E. Return on assets
A. Return on equity
B. Interest coverage ratio
C. Operating income
D. Operating expense ratio
E. Return on assets
Correct Answer: B
Return on equity is the rate of return earned on stockholders' equity in the business. It is a measure of profitability.
Return on assets indicates the firm's return on all the capital employed.
User Contributed Comments 4
| User | Comment |
|---|---|
| Gina | Interest Coverage Ratio = EBIT/Interest Expense a financial risk ratio; earnings flow; how far can earnings decline before it becomes impossible to service debt with them. |
| mordja | Interest coverage ratio is a solvency ratio of the coverage ratio type. |
| bravoshieh | Really? Should not it be "Operating income ratio" rather? |
| ibrahim18 | @bravoshieeh. I thought so too |