Look at the Following Table of Data for Key Biscuit

question 47

Multiple Choice

Look at the following table of data for Key Biscuit Company: What must have caused the firm's ROE to drop?

• A)The firm began using more debt as a percentage of financing.
• B)The firm began using less debt as a percentage of financing.
• C)The compound leverage ratio was less than 1.
• D)The operating ROA was declining.

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Definitions:

Adjusting Entries

Accounting records prepared at the close of a fiscal period to distribute profits and costs to the period they genuinely took place.

Accrued Revenues

Revenues earned by a company for services or goods provided but not yet received or billed to the client.

Cash Basis

An accounting method where revenues and expenses are recorded when they are actually received or paid, not when they are incurred.

Adjustments

Entries made in accounting records to correct or update financial information.