A Firm Currently Has $600 in Debt for Every $1,000

question 65

Multiple Choice

A firm currently has $600 in debt for every $1,000 in equity.Assume the firm 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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Definitions:

Estimated Lifetimes

Predictions or calculations regarding the duration or length of time something is expected to last.

Histogram

A graphical representation of the distribution of numerical data, typically shown as bars indicating the frequency of different intervals of values.

Skewed Right

A distribution shape where the tail is longer on the right side, indicating that the majority of the data points are located to the left.

Olympic Games

A major international multi-sport event featuring summer and winter sports competitions in which thousands of athletes participate in a variety of competitions.