If a Firm Decreases Its Operating Costs, All Else Constant

question 19

Multiple Choice

If a firm decreases its operating costs, all else constant, then:

• A) The profit margin increases while the return on equity decreases.
• B) The return on assets increases while the return on equity decreases.
• C) The total asset turnover rate decreases while the profit margin increases.
• D) Both the profit margin and the equity multiplier increase.
• E) Both the return on assets and the return on equity increase.

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Definitions:

Quantitative Data

Numerically based information used to measure, evaluate, or analyze variables or outcomes in various studies or reports.

Informed Consent

An ethical requirement whereby participants are fully informed about the procedures and risks involved before participating.

Relative Importance

The significance or weight assigned to certain factors or elements in comparison to others within a specific context or analysis.

Subjective Satisfaction

A personal perception or feeling of contentment and fulfillment that varies from individual to individual.