Determine a Firm's Financial Policy Multiplier Based on the Following

question 63

Multiple Choice

Determine a firm's financial policy multiplier based on the following information: sustainable growth rate = 20%; net profit margin = 10%; and asset turnover = 2.0 times.

• A)1.00
• B)1.25
• C)1.50
• D)2.00

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Definitions:

Accounting Information System

A system designed to collect, store, manage, process, retrieve, and report financial data for decision making.

Flexibility Principle

In accounting, it refers to the principle that financial reporting and its practices should be flexible enough to adapt to changes in the business environment or in accounting standards.