By How Much Must a Firm Reduce Its Assets in Order

question 93

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? Assume that the reduction in assets has no effect on sales or profit margin

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

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Definitions:

Equilibrium Rental Price

The price at which the quantity of rental properties supplied equals the quantity demanded.

Quota Rent

The earnings exceeding the normal anticipated returns due to import or export quotas.

Deadweight Loss

A decrease in economic effectiveness occurring when a good or service doesn't reach its free market equilibrium.

Minimum Wage

The lowest legal hourly rate of pay that employers can compensate workers, established to protect employees from exploitation.