Which of the Following Statements Is Most Correct

question 17

Multiple Choice

Which of the following statements is most correct?

• A)An increase in a firm's debt ratio, with no changes in its sales and operating costs, could be expected to lower its profit margin on sales.
• B)An increase in DSO, other things held constant, would generally lead to an increase in the total asset turnover ratio.
• C)An increase on the DSO, other things held constant, would generally lead to an increase in the ROE.
• D)In a competitive economy, where all firms earn similar returns on equity, one would expect to find lower profit margins for airlines, which require a lot of fixed assets relative to sales, than for fresh fish markets.
• E)It is more important to adjust the Debt/Asset ratio than the inventory turnover ratio to account for seasonal fluctuations.

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