Look at the Following Table of Data for Key Biscuit

question 47

Multiple Choice

Look at the following table of data for Key Biscuit Company: What must have caused the firm's ROE to drop?

• A) Because the firm began using more debt as a percentage of financing
• B) Because the firm began using less debt as a percentage of financing
• C) Because the compound leverage ratio was less than 1
• D) Because the operating ROA was declining

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Definitions:

Journal Entry

A record in the accounting ledger that represents a transaction and its effect on accounts.

Fair Value

Fair Value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

Ordinary Repairs

Regular maintenance or repairs to keep property and equipment functioning efficiently without extending its life or increasing its value substantially.