By How Much Must a Firm Reduce Its Assets in Order

question 33

Multiple Choice

By how much must a firm reduce its assets in order to improve ROA from 10% to 12% if the firm's operating profit margin is 5% on sales of $4 million? (Use the value in dollars)

• A)$240,000
• B)$333,333
• C)$400,000
• D)$516,167

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Definitions:

Strategic Objectives

The specific goals set by a business or an organization to guide its operations and to achieve long-term achievements.

Dodd-Frank Act

United States federal law that places regulation of the financial industry in the government's hands to prevent financial crises.

Clawback Provisions

Agreements that allow companies to retrieve all or part of an employee's compensation under certain conditions, such as misconduct or performance failures.

CEO Pay

The compensation package, including salary, bonuses, and benefits, given to the Chief Executive Officer of a company.