You Observe That a Firm's ROE Is Above the Industry

question 69

Multiple Choice

You observe that a firm's ROE is above the industry average, but its profit margin and debt ratio are both below the industry average.Which of the following statements is CORRECT?

• A) Its total assets turnover must equal the industry average.
• B) Its total assets turnover must be above the industry average.
• C) Its return on assets must equal the industry average.
• D) Its TIE ratio must be below the industry average.
• E) Its total assets turnover must be below the industry average.

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Definitions:

Defense Mechanism

A defense mechanism is a psychological strategy unconsciously used to protect a person from anxiety arising from unacceptable thoughts or feelings.

Projection

A defense mechanism where an individual ascribes their own unwanted thoughts, feelings, or motives onto another person.

Dishonest Tax Returns

The act of knowingly providing false information on a tax return to reduce tax liability, which is illegal and subject to penalties.

Defense Mechanism

Psychological strategies brought into play by individuals, groups, or even nations, to cope with realities and to maintain self-image by concealing the motivations behind one’s behavior.