Which of the Following Statements Is CORRECT

question 55

Multiple Choice

Which of the following statements is CORRECT?

• A) Suppose a firm's total assets turnover ratio falls from 1.0 to 0.9, but at the same time its profit margin rises from 9% to 10% and its debt increases from 40% of total assets to 60%. Under these conditions, the ROE will increase.
• B) Suppose a firm's total assets turnover ratio falls from 1.0 to 0.9, but at the same time its profit margin rises from 9% to 10% and its debt increases from 40% of total assets to 60%. Without additional information, we cannot tell what will happen to the ROE.
• C) The DuPont equation provides information about how operations affect the ROE, but the equation does not include the effects of debt on the ROE.
• D) Other things held constant, an increase in the debt ratio will result in an increase in the profit margin.
• E) Suppose a firm's total assets turnover ratio falls from 1.0 to 0.9, but at the same time its profit margin rises from 9% to 10%, and its debt increases from 40% of total assets to 60%. Under these conditions, the ROE will decrease.

---

Definitions:

Drugs Affect

The impact substances have on the body's systems, altering mood, consciousness, perception, or physical state.

Fish Oil

Oil derived from the tissues of oily fish, containing omega-3 fatty acids which have various health benefits.

Brain Functioning

Refers to how different parts of the brain operate and interact to support thoughts, behaviors, and physiological processes.

Double-Blind Procedure

An experimental procedure in which both the research participants and the research staff are ignorant (blind) about whether the research participants have received the treatment or a placebo. Commonly used in drug-evaluation studies.