Applies to the average accounting rate of return

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Reference no: EM131347233

1. A bank has a profit margin of 5 percent, an asset utilization ratio of 11 percent, an equity multiplier of 12, and a retention ratio of 60 percent. What is this bank's ICGR? A. 6.60 percent B. 3.96 percent C. 7.20 percent D. 0.33 percent E. None of the options is correct. I want to know why is the answer B how do we solve it?

2. Which one of the following correctly applies to the average accounting rate of return?

a. It considers the time value of money.

b. It measures net income as a percentage of the sales generated by a project.

c. It is the best method of analyzing mutually exclusive projects from a financial point of view.

d. It is the primary methodology used in analyzing independent projects.

e. It can be compared to the return on assets ratio.

Reference no: EM131347233

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