The Following Question Relates to PQR, Which Has the Following

question 7

Multiple Choice

The following question relates to PQR, which has the following ratios: return on assets, (ROA) 12 per cent; return on equity (ROE) 15 per cent; and current ratio (CR) of 1.8:1. Additional credit sales of $2 million (cost price $1.5 million) are made. This transaction will:

• A) increase ROA, ROE and CR.
• B) increase ROA and ROE but not CR.
• C) increase ROA and CR but not ROE.
• D) increase ROA and ROE but decrease CR.