What Must Happen to Asset Turnover to Leave ROE Unchanged

question 91

Multiple Choice

What must happen to asset turnover to leave ROE unchanged from its original 16 percent level if the profit margin is reduced from 8 percent to 6 percent and the leverage ratio increases from 1.2 to 1.6? Asset turnover must:

• A)Remain constant
• B)Increase from 1.46 to 2.33
• C)Decrease from 14.58 to 2.33
• D)Increase from 4.76 to 9.60 Old ROE: .16 = .08 x Asset turnover x 1.2
• \1)667 = Asset turnover
• New ROE: .16 = .06 x Asset turnover x 1.6

Understand the significance of double-blinding in an experiment.

Recognize the necessity of a control group in experimental research.

Recognize and describe the role of blocking variables in experimental design.

Identify and explain common flaws in experimental design.

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