A Company Increases Sales Revenue

question 117

Multiple Choice

A company increases sales revenue.Total assets and net income are unchanged.The company's

• A)net profit margin and asset turnover both rise.
• B)net profit margin rises and its asset turnover falls.
• C)net profit margin and asset turnover ratio both fall.
• D)net profit margin falls and its asset turnover ratio rises.

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Definitions:

Par Value

The face value of a bond or stock as stated by the issuer, often related to its redemption value or original stock value.

Collateralized Debt Obligation

A type of structured asset-backed security (ABS) with multiple tranches that can invest in different types of debt, including bonds and loans, which are grouped together.

Corporate Loans

Loans provided to companies to finance their operations, investments, or expansion projects.

Credit Default Swaps

Financial derivative contracts that allow an investor to swap or offset their credit risk with that of another investor.