A Corporation Has a Total Asset Turnover of 2 Times

question 95

Multiple Choice

A corporation has a total asset turnover of 2 times, ROA of 12 percent and EM of 1.17. What is this firm's profit margin and debt ratio?

• A)Profit margin: 2 percent; Debt ratio: 19.45 percent
• B)Profit margin: 3 percent; Debt ratio: 31.81 percent
• C)Profit margin: 4 percent; Debt ratio: 12.94 percent
• D)Profit margin: 6 percent; Debt ratio: 14.53 percent

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Definitions:

Balance Sheet

A financial statement that presents a company's financial position at a specific point in time, showing assets, liabilities, and shareholders' equity.

Income Statement

A financial statement that shows a company's revenue, expenses, and profit over a particular period, providing insight into its financial performance.

Fixed Costs

Fixed Costs are expenses that do not change with the level of production or sales, such as rent or salaries.

Volume of Activity

A measure of the quantity of work performed or the level of operations, often used to allocate overhead costs in activity-based costing.