An Analyst Gathered the Following Data for a Company Based Only on the Information Above, the Most Appropriate Conclusion

question 46

Multiple Choice

An analyst gathered the following data for a company: $\begin{array}{lccc}&2013&2014&2015\\\text { Sales } & \$ 5,000,000 & \$ 4,900,000 & \$ 4,770,000 \\\text { Net assets } & \$ 1,630,000 & \$ 1,625,000 & \$ 1,623,000 \\\text { ROE } & 9.8 \% & 10.0 \% & 11.2^{\circ} \% \\\text { Total asset turnover } & 2.0 & 2.1 & 2.2 \\\text { Gross margin } & 33.0 \% & 33.6 \% & 34.2 \%\end{array}$ Based only on the information above, the most appropriate conclusion is that:

• A)the company's net profit margin and debt levels have decreased.
• B)the company's net profit margin and debt levels have increased.
• C)the company's net profit margin has decreased but debt levels have increased.
• D)the company's net profit margin has increased and it has more liquidity.

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Definitions:

Instrument Payable

A financial document promising to pay a specified amount of money to a person in possession or to their order.

Time Paper

A financial document or instrument that is payable at a future specified date, not upon demand or presentation.

Negotiable Instrument

A written document guaranteeing the payment of a specific amount of money, either on-demand or at a set time, with the payee’s name either mentioned or left blank.

Separate Agreement

An individual contract related to, but distinct from, another contract, often detailing specific aspects or obligations not covered in the primary agreement.