The Following Ratios Were Computed from the Financial Statement of Darren

question 76

Multiple Choice

The following ratios were computed from the financial statement of Darren Technologies: Which of the following statements is true?

• A) There has been a steady decline in ROE from 2009 through 2011.
• B) The increase in ROA is due primarily to the changes in asset turnover.
• C) The changes in ROA could be due to increasing sales.
• D) The change in ROA could be due to a large increase in the asset base of the company.

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Definitions:

Rent

A periodic payment made to use a property or piece of equipment owned by another party.

Unavoidable

Refers to events or outcomes that cannot be prevented or avoided.

Effective Utilization

The degree to which a resource, such as equipment or labor, is used effectively to produce goods or services.

Bottleneck

A machine or some other part of a process that limits the total output of the entire system.