You Have Prepared a Trend Series for Company XYZ for Three

question 23

Multiple Choice

You have prepared a trend series for Company XYZ for three years, 2004-2006 inclusive, using 2004 as the base year. Below are selected data.
$\begin{array}{lccc} & 2004 & 2005 & 2006 \\\text { Sales } & 100 & 120 & 135 \\\text { Net Income } & 99 & 118 & 128 \\\text { Total Assets } & 100 & 119 & 130\end{array}$
-From the above information, you can infer that:

• A)rate of sales growth has decreased.
• B)net income to sales (return on sales) is increasing over time.
• C)asset turnover is decreasing over time.
• D)None of the above

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Definitions:

Diseconomies of Scale

Increases in the firm’s per-unit costs associated with increases in firm size due to inefficiencies and monitoring problems.

Anti-Employment Discrimination Legislation

Laws designed to prevent discrimination in hiring, promotion, job assignment, termination, and compensation based on certain specified characteristics.

Female/Male Earnings Ratio

A measure comparing the average earnings of female workers to those of male workers, often utilized to highlight gender pay gaps in the workforce.

Law of Diminishing Returns

An economic principle stating that if one factor of production is increased while others remain constant, the overall returns will eventually decrease after a certain point.