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:

Mature Industry

An industry that has experienced long-term growth and is characterized by stability, a slow rate of growth, and fewer opportunities for new entrants.

Substitute Products

Goods or services that can replace or serve as alternatives to another product, affecting its demand and market.

Resource Shortages

A situation where the demand for resources exceeds the supply available within a given context or environment.

Changing Market Tastes

The evolution or shift in consumer preferences and desires, often influenced by cultural, social, or economic factors.