Assume That the Following Financial Ratios Were Computed from the 2017

question 18

Multiple Choice

Assume that the following financial ratios were computed from the 2017 financial statements of Florida Industries:
$\begin{array}{|l|l|}\hline \text { Return on sales (profit margin) } & 0.29 \\\hline \text { Return on assets } & 0.17 \\\hline \text { Common equity leverage } & 0.87 \\\hline \text { Capital structure leverage } & 2.22 \\\hline \text { Asset turnover } & 1.69 \\\hline\end{array}$
If Florida holds its other ratios constant in 2018, but increases its capital structure leverage ratio to 3.20, what will be the 2018 return on equity?

• A)15%
• B)51%
• C)86%
• D)47%

---

Definitions:

Binary Fission

A form of asexual reproduction where a parent organism divides into two approximately equal parts, each becoming a new organism.

Reproduction

The biological process by which new individual organisms are produced, either sexually or asexually, ensuring the continuation of a species.

F Factor

A DNA element containing genes for replication and transfer, found in some bacteria and capable of initiating bacterial conjugation, a form of genetic transfer.

Sex Pili

Hair-like structures on the surface of bacterial cells that are involved in the process of bacterial conjugation, facilitating the transfer of genetic material between cells.