A Firm with a Substandard Net Profit Margin Can Improve

question 19

Multiple Choice

A firm with a substandard net profit margin can improve its return on total assets by

• A) increasing its debt ratio.
• B) increasing its total asset turnover.
• C) decreasing its total asset turnover.
• D) decreasing its fixed asset turnover.

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Definitions:

MPC (Marginal Propensity to Consume)

The proportion of additional income that is spent on consumption.

Saving

The act of setting aside money for future use instead of spending it immediately.

Disposable Income

The capital households have to spend and save once income taxes have been cleared.

Disposable Income

The financial resources that households have at their disposal for spending and saving after income tax deductions.