A Firm Has an ROA of 12 Percent and an ROE

question 59

Multiple Choice

A firm has an ROA of 12 percent and an ROE of 52 percent. What is the firm's equity multiplier?

• A) 0.23
• B) 4.33
• C) 1.63
• D) 2.90

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Definitions:

Intangible Assets

Non-physical assets of a business that have value, such as patents, trademarks, goodwill, and brand recognition.

Durable Goods

Products that are intended to last for a considerable length of time (over three years), such as appliances, vehicles, and furniture.

Nondurable Goods

Products that are consumed or have a useful life shorter than three years, such as food, beverages, and paper products.

Economic Value

The worth or usefulness of a good or service determined by its ability to fulfill consumer needs and preferences.