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

question 7

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) Leverage ratio must increase by .5.
• B) Leverage ratio must increase by 5.
• C) Leverage ratio must increase by 16.67%.
• D) Leverage ratio must increase by 33.3%.

---

Definitions:

Phone Interviews

A method of conducting an interview or gathering information over the telephone.

Practise

The act of repeatedly performing an activity or exercise to acquire or maintain proficiency in it.

Qualifications

Credentials or achievements demonstrating one's ability or suitability for a particular job or task.

Downsized

The process of reducing the size or scale of something, often in the context of business workforce reduction.