The best indication of the operational effiency of management is?

A. net income
B. earnings per share
C. EBIT
D. gross profit

I like net income as a metric for measuring operational efficiency of management. The amout of money a corporation has after all the bills are paid is a pretty good indicator of how the management is working.

A is my answer

Is this correct???

To determine the best indication of the operational efficiency of management, it is important to understand the definitions and relevance of the given options.

A. Net income: Net income refers to the total revenue a company generates minus all expenses and taxes. It reflects the company's profit after all costs have been deducted.

B. Earnings per share: Earnings per share (EPS) is calculated by dividing the net income by the number of outstanding shares. It represents the profitability of a company on a per-share basis.

C. EBIT (Earnings Before Interest and Taxes): EBIT is a measure of a company's operating profit before considering interest, tax, and other non-operational expenses.

D. Gross profit: Gross profit is the total revenue minus the cost of goods sold. It represents the profit generated solely from the production and sale of goods or services.

Although net income is an important measure of financial performance, it may not be the most accurate metric for assessing operational efficiency. It can be influenced by various factors such as non-operational income, tax policies, and financial strategies. Therefore, option A is not necessarily the best answer for indicating management's operational efficiency.

A more suitable option for measuring operational efficiency could be EBIT (option C). EBIT focuses specifically on the company's operating activities, excluding interest and taxes. By looking at operating profit before non-operational factors, it provides a clearer picture of how effectively a company's management is generating profits from its core operations.

Thus, the correct answer for the best indication of operational efficiency of management is C. EBIT.

I already answered this yesterday.