The Board of Directors Is Dissatisfied with Last Year's ROE

question 99

Multiple Choice

The board of directors is dissatisfied with last year's ROE of 15%. If the profit margin and asset turnover ratio remain unchanged at 8% and 1.25, respectively, by how much must the leverage ratio (i.e., assets/equity) increase to achieve 20% ROE?

• A) .50%
• B) 5%
• C) 16.67%
• D)33.33%

---

Definitions:

Symptoms

Observable signs or manifestations of a condition or disease, as reported by a patient or observed during a medical examination.

Diagnosis

The identification of the nature and cause of an illness or other problem by examination of the symptoms.

Psychological Disorder

A pattern of behavioral or psychological symptoms that impact multiple areas of life and/or bring significant distress.

Distress

A negative stress that can result from adverse events, leading to physical and psychological discomfort.