Which One of the Following Will Decrease If a Firm

question 75

Multiple Choice

Which one of the following will decrease if a firm can decrease its operating costs, all else constant?

• A)return on equity
• B)return on assets
• C)profit margin
• D)equity multiplier
• E)price-earnings ratio

Describe the handling and reporting of contingent liabilities.

Understand the impact of liabilities on a company’s financial health and risk assessment.

Recognize the requirements for the disclosure of liabilities in financial statements.

Comprehend the calculation and significance of the times interest earned ratio.

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Definitions:

Synergy

The positive incremental net gain associated with the combination of two firms through a merger or acquisition.

Utilization

In finance, utilization can refer to the degree to which a company’s resources or assets are being used efficiently to generate revenues or profits.

Acquiring Firm's Assets

Refers to the assets that a company takes control of as a result of purchasing or merging with another business, contributing to its overall asset base.

Friendly Mergers

Mergers that are agreed upon and pursued by both the acquiring and the target companies, often with mutual benefits in mind.