By How Much Must a Firm Reduce Its Assets in Order

question 12

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?

• A) $240,000
• B) $333,333
• C) $400,000
• D)$516,167

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Definitions:

Explicit Costs

Direct payments made to others in the course of running a business, such as wages, rent, and materials.

Normal Rate

The normal rate often refers to a baseline or average level of interest or return expected on an investment or loan in economics and finance.

Cost Per Bushel

The expenditure involved in producing or acquiring one bushel of a commodity, such as grain.

Corn Producer

An entity or individual that engages in the cultivation and production of corn for various purposes, including food, feed, and industrial uses.