If a Firm Produces a Return on Assets of 15

question 23

Multiple Choice

If a firm produces a return on assets of 15 percent and also a return on equity of 15 percent,then the firm:

• A)has no debt of any kind.
• B)is using its assets as efficiently as possible.
• C)pays all its earnings out in dividends.
• D)also has a current ratio of 15.
• E)has an equity multiplier of 2.

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Definitions:

Utility Function

A mathematical representation that ranks the preferences of consumers or entities based on the consumption of goods and services.

Preferences

Refers to the ordering of different alternatives by individuals based on their values, satisfaction, or utility they provide.

Expensive Goods

Products or services that have a high price relative to their intrinsic value or compared to other alternatives in the market.

Utility Function

A mathematical representation of how different combinations of goods or services can provide different levels of happiness or satisfaction to a consumer.