If a Retailer Has a Net Profit Margin of 3

question 16

Multiple Choice

If a retailer has a net profit margin of 3 percent,asset turnover of 4.0x,and financial leverage of 2.0x,then its return on net worth is:

• A) 6 percent.
• B) 8 percent.
• C) 12 percent.
• D) 24 percent.
• E) 48 percent.

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Definitions:

Economic Profits

The gap between a company's overall income and its combined direct and indirect expenses.

Long Run

A period where all inputs or factors of production can be varied by firms, allowing for the adjustment to changes in the market.

Technical Prowess

Refers to the expertise and superior skill set in handling technology and technical tasks.

Innovative Designs

The creation of new or significantly improved products, services, or systems that provide novel solutions or advancements.