If a Firm Has an After-Tax Profit Margin of 5

question 66

Multiple Choice

If a firm has an after-tax profit margin of 5%, an asset turnover of 2.5 times, and no debt, the return on equity is:

• A)2%
• B)8.5%
• C)12.5%
• D)not enough information available

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Definitions:

Written Agreement

A legally binding contract that has been documented in writing between two or more parties.

Partnership Agreement

A legal document that outlines the rights, responsibilities, and proportions of ownership among partners in a partnership.

Risks

The potential for losing something of value, or the exposure to danger, harm, or loss.

Articles of Partnership

A document that formalizes an agreement between partners to manage and operate a business together and share its profits.