Which of the Following Statements Is Most Correct

question 72

Multiple Choice

Which of the following statements is most correct?

• A) An increase in a firm's debt ratio, with no changes in its sales and operating costs, could be expected to lower its profit margin on sales.
• B) An increase in the DSO, other things held constant, would generally lead to an increase in the total asset turnover ratio.
• C) An increase in the DSO, other things held constant, would generally lead to an increase in the ROE.
• D) In a competitive economy, where all firms earn similar returns on equity, one would expect to find lower profit margins for airlines, which require a lot of fixed assets relative to sales, than for fresh fish markets.
• E) It is more important to adjust the Debt/Assets ratio than the inventory turnover ratio to account for seasonal fluctuations.

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Definitions:

Conjuncts

Elements combined within a conjunction in logic, each of which is true for the whole to be true.

Disjuncts

Components of a disjunction (an "or" statement) that represent alternative statements or clauses, where if one is true, the others do not have to be.

Antecedents

Factors or events that precede and potentially influence the outcome of a subsequent event or condition.

Consequents

The outcomes or results that logically follow from a given condition or premise.