Scandals Involving Enron and WorldCom Drew Heightened Attention to the Possibility

question 27

Multiple Choice

Scandals involving Enron and WorldCom drew heightened attention to the possibility that financial statements might be misreported to portray a favorable impression of a company's financial results.Which of the following false impressions could be suggested by the ratio indicated?

• A)Greater control of expenses might be suggested by the net profit margin ratio.
• B)Greater efficiency in asset use might be suggested by the debt-to-assets ratio.
• C)Greater control of expenses might be suggested by the debt-to-assets ratio.
• D)Less financing risk might be suggested by the asset turnover ratio.

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Definitions:

Identical Twin

One of two twins who originate from the same fertilized egg, sharing exactly the same genetic material and, consequently, typically appearing very similar.

Prenatal Environment

The prenatal environment encompasses all of the physical, chemical, and biological factors that affect a developing fetus within the womb.

Fertilized Eggs

Ova that have been penetrated by sperm, initiating the process of development into an embryo and, subsequently, into a fetus.

Neuroticism

A personality trait characterized by emotional instability, anxiety, moodiness, worry, and fear.