Which of the Following Statements Is Correct

question 101

Multiple Choice

Which of the following statements is correct?

• A)If two firms have the same ROA, the firm with the most debt can be expected to have the lower ROE.
• B)An increase in the DSO, other things held constant, could be expected to increase the total assets turnover ratio.
• C)An increase in the DSO, other things held constant, could be expected to increase the ROE.
• D)An increase in a firm's debt ratio, with no changes in its sales or operating costs, could be expected to lower the profit margin.

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Definitions:

Spread

The difference between two values or rates, commonly used in financial contexts to describe the gap between bid and ask prices or the yield differences between bonds.

Secondary Equity Offering

A process where a company issues additional shares to the public after the initial public offering (IPO) to raise more capital.

Rights Offering

A method by which companies raise capital, by giving existing shareholders the right to buy new shares at a discount before they are offered to the public.

Stock Price

The current market price at which a share of a company is bought or sold, reflecting the market's perception of its value at any given time.