A Company Has Return on Assets of -8

question 41

Multiple Choice

A company has return on assets of -8%. Return on sales are -6%. The leverage ratio is 2.0. Following DuPont analysis, what is return on equity?

• A)-6%
• B)-8%
• C)-16%
• D)-28%

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Definitions:

Externality Hypothesis

A theory suggesting that individuals attribute their own behavior to external factors and circumstances beyond their control.

Homeostasis

The regulatory process by which biological systems tend to maintain stability while adjusting to conditions that are optimal for survival.

Overjustification Effect

The phenomenon where providing excessive external rewards for an already internally rewarding activity leads to a decrease in intrinsic motivation.

Overjustification Effect

The phenomenon in which rewarding a person for performing an activity actually decreases their intrinsic motivation to perform that activity.