What Is the Return on Investment for a Firm That

question 99

Multiple Choice

What is the return on investment for a firm that has a debt ratio of 0.65, a net profit margin of 6.5%, sales of $740,000, and a total asset turnover of 4?

• A) 26.0%
• B) 16.9%
• C) 6.5%
• D) 4.6%

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Definitions:

Interest-Burden Ratio

A financial ratio indicating the proportion of profits remaining after paying interest expenses, used to measure a company's ability to manage its interest obligations.

Profit Margin

A financial ratio indicating the percentage of revenue that exceeds the cost of goods sold, representing the proportion of each dollar of revenue that constitutes net profit.

ROA

Return on Assets, a financial ratio indicating how profitable a company is relative to its total assets.

IFRS

International Financial Reporting Standards, a set of accounting standards developed by the International Accounting Standards Board (IASB) that companies use for financial reporting.