How Much Will Gamma Inc

question 80

Multiple Choice

How much will Gamma Inc.'s equity holders earn given the following information: total asset turnover is 0.85, profit margin is 0.15, and debt-equity ratio is 0.25?

• A)9.56 percent
• B)15.94 percent
• C)16.96 percent
• D)38.25 percent Given D/E ratio then leverage ratio:
• 1 + D/E = 1 + 0.25 = 1.25
• ROE = PM x TAT x LR = 0.12 x 0.65 x 1.25

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Definitions:

Ototoxic

Having a toxic effect on the ear or its nerve supply, often referring to drugs or substances that can cause hearing loss or balance disorders.

Gentamicin

An antibiotic used to treat various bacterial infections, especially those caused by bacteria resistant to other antibiotics.

External Ear

The outer portion of the ear, consisting of the pinna and the ear canal, which gathers sound waves and directs them inward.

Cerumen

A natural, waxy substance produced by glands in the ear canal that helps protect and lubricate the ear.