If the CEO of a Large, Diversified, Firm Were Filling

question 38

Multiple Choice

If the CEO of a large, diversified, firm were filling out a fitness report on a division manager (i.e., "grading" the manager) , which of the following situations would be likely to cause the manager to receive a better grade? In all cases, assume that other things are held constant.

• A) The division's basic earning power ratio is above the average of other firms in its industry.
• B) The division's total assets turnover ratio is below the average for other firms in its industry.
• C) The division's debt ratio is above the average for other firms in the industry.
• D) The division's inventory turnover is 6, whereas the average for its competitors is 8.
• E) The division's DSO (days' sales outstanding) is 40, whereas the average for its competitors is 30.

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Definitions:

Demand Curve

A graph showing the relationship between the price of a good and the quantity demanded by consumers, typically sloping downward from left to right.

Tax

An obligatory fiscal contribution or another form of assessment enacted by a governmental body on individuals or entities, aimed at generating revenue for government activities and public spending.

Equilibrium Price

The price at which the quantity of a good demanded by consumers equals the quantity supplied by producers, resulting in a stable market condition.

Supply Function

An economic formula that shows the relationship between the quantity of a good supplied and its price, often influenced by production costs and market competition.