Firm ABC and Firm XYZ Both Have ROAs of 12%;

question 67

Multiple Choice

Firm ABC and Firm XYZ both have ROAs of 12%; however, Firm ABC has a much higher ROE than Firm XYZ. Which of the following do we know to be true? Relative to Firm ABC, Firm XYZ has a lower:

• A) debt ratio.
• B) total asset turnover ratio.
• C) current ratio.
• D) net profit margin.

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Definitions:

Hepatitis C

A liver infection caused by the hepatitis C virus, leading to inflammation and potentially severe liver damage.

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A detailed account or statement describing the results of an investigation, study, or assessment, often used in professional or academic contexts.

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An area of mental processes related to knowledge, understanding, reasoning, and intellectual development.

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An individual undergoing training in a particular field or job in order to gain the skills and knowledge necessary for competent performance.