If a Firm's Return on Investment, I

question 65

Multiple Choice

If a firm's return on investment, i.e., earnings after taxes divided by total assets, is 7%, and the firm has no preferred stock financing, it is

• A)possible that its return on stockholders' equity is 10%.
• B)possible that its return on stockholders' equity is 5%.
• C)not possible for its debt-to-equity ratio to be 1.0.
• D)not possible for its net profit margin to be 7%.