A Firm Has an Asset Turnover Ratio of 1

question 92

Multiple Choice

A firm has an asset turnover ratio of 1.6 and a net profit margin of 1.3%.If the firm has 5 dollars in assets per dollar of equity,what is the firm's ROE?

• A)4.1%
• B)6.5%
• C)6.2%
• D)10.4%
• E)1.3%

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Definitions:

Single-step Statement

A simple form of income statement that calculates net income by subtracting total expenses from total income in one step.

Multiple-step Statement

An income statement that separately reports operating and non-operating activities, making it easier to understand the financial results.

Income Statement

A financial statement that shows a company's revenue and expenses over a specific period, revealing net profit or loss.

Selling Expense

Costs incurred directly related to the sale of a product or service, including advertising, shipping, and sales staff salaries.