A Firm with a Low Return on Total Assets Can

question 86

Multiple Choice

A firm with a low return on total assets can improve its return on equity, all else remaining the same, by ________.

• A) increasing its debt ratio
• B) increasing its total asset turnover
• C) decreasing its debt ratio
• D) decreasing its total asset turnover

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Definitions:

Standard Deviation

A measure of the amount of variation or dispersion in a set of values, representing an average distance from the mean.

Mean

The average value obtained by adding all the data points in a set together and then dividing by the number of data points.

Standard Normal Curve

A symmetric bell-shaped curve that represents the distribution of many types of data where the mean is 0 and the standard deviation is 1.

Z-score

An index quantifying the position of a value relative to the average value in a dataset, expressed as the amount of standard deviations away from this mean.