Answer the Following Question(s)using the Information Below

question 127

Multiple Choice

Answer the following question(s) using the information below:
Coldbrook Company has two sources of funds: long-term debt with a market and book value of $15 million issued at an interest rate of 10%, and equity capital that has a market value of $9 million (book value of $5 million) .Coldbrook Company has profit centres in the following locations with the following operating incomes, total assets, and current liabilities.The cost of equity capital is 15%, while the tax rate is 30%.
-Which two ratios are used in the DuPont method of profitability analysis to create return on assets?

• A)profit margin and asset turnover
• B)asset turnover and return on investment
• C)profit margin and operating leverage
• D)profit margin and return on sales
• E)return on sales and return on assets

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Definitions:

Trace

Trace often refers to a very small amount or indication of something that is hardly noticeable or is present in minimal concentrations.

Carbohydrates

Organic compounds, including sugars, starch, and cellulose, which are an important source of energy for the body; found in a variety of foods.

Butter

A dairy product made from churning milk or cream, commonly used as a spread or cooking ingredient, known for its rich flavor and high-fat content.

Thiamine

A vitamin belonging to the B complex (Vitamin B1), essential for glucose metabolism and plays a key role in nerve, muscle, and heart function.