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:

Premium

The amount paid for an option or insurance policy above its intrinsic value or the amount that an asset's selling price is above its face value.

Gross Profit

The difference between sales revenue and the cost of goods sold before deducting overhead, payroll, taxation, and interest payments.

Option Contract

A financial contract that gives the holder the right, but not the obligation, to buy or sell an underlying asset at a specified price on or before a specified date.

At The Money

Describes an option where the current price of the underlying asset is equal to the strike price of the option.