A Firm Has a (Net Profit/pretax Profit) Ratio of 0

question 62

Multiple Choice

A firm has a (net profit/pretax profit) ratio of 0.6, a leverage ratio of 2, a (pretax profit/EBIT) of 0.6, an asset turnover ratio of 2.5, a current ratio of 1.5, and a return on sales ratio of 4%.The firm's ROE is

• A)4.2%.
• B)5.2%.
• C)6.2%.
• D)7.2%.

Recognize the importance of aligning budgeting processes with company objectives and planning cycles.

Understand the limitations and potential negative outcomes associated with budgeting practices.

Understand the impact of debt covenants on a company's operations and financial flexibility.

Identify the types of covenants and the consequences of their violation.

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Definitions:

Conversion Disorder

A mental condition where psychological stress is expressed through physical symptoms, without an underlying physical cause.

Repression

A defense mechanism where unwanted thoughts and memories are pushed out of conscious awareness.

Anxiety Disorder

A mental health disorder characterized by persistent and excessive worry and fear about everyday situations.

Lifetime Risk

The probability that an individual, over the course of a lifetime, will develop or die from a specific disease.