A Firm Has ROE of 5

question 16

Multiple Choice

A firm has ROE of 5.5% and an asset turnover ratio of 1.2.If the firm has 10 dollars in assets per dollar of equity,what is the firm's net profit margin?

• A)1.2%
• B)0.66%
• C)5.5%
• D)6.6%
• E)0.46%

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Definitions:

Inventory

The quantity of goods or materials that a business holds for the purpose of resale or production.

JIT Partnerships

Collaborations between companies and their suppliers to implement Just-In-Time inventory strategies, aiming to reduce waste and increase efficiency.

In-plant Inventory

The stock of goods and materials held within a manufacturing plant for the production process or for immediate use.

Small Lots

Production or shipment of goods in small quantities, often used to reduce inventory costs and increase flexibility.