When Would the "Return on Equity" Equal the "Return on Assets

question 46

Multiple Choice

When would the "return on equity" equal the "return on assets"?

• A) Whenever the debt to equity ratio is one
• B) Whenever the debt ratio is zero
• C) Whenever a firm has positive net worth
• D) Whenever the firm has positive net worth and positive net income

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Definitions:

Break-even Point

The point at which total revenues equal total costs, resulting in no net loss or gain for a business.

Contribution Format

A format for income statements that distinguishes between fixed and variable expenses, emphasizing the contribution margin.

Break-even Point

The sales level at which a business generates neither profit nor loss, covering all fixed and variable costs.

Unit Sales

The quantity of products sold, not considering the price at which they were sold.