DL Farms Currently Has $600 in Debt for Every $1,000

question 38

Multiple Choice

DL Farms currently has $600 in debt for every $1,000 in equity. Assume the company uses some of its cash to decrease its debt while maintaining its current equity and net income. Which one of the following will decrease as a result of this action?

• A) Equity multiplier
• B) Total asset turnover
• C) Profit margin
• D) Return on assets
• E) Return on equity

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