If a Firm Decreases Its Operating Costs, All Else Constant

question 51

Multiple Choice

If a firm decreases its operating costs, all else constant, then:

• A)the profit margin increases while the equity multiplier decreases.
• B)the return on assets increases while the return on equity decreases.
• C)the total asset turnover rate decreases while the profit margin increases.
• D)both the profit margin and the equity multiplier increase.
• E)both the return on assets and the return on equity increase.

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Definitions:

Winning Percent

The ratio or fraction that represents the number of wins in relation to total games or matches played.

Goals Per Game

A statistical measure used in sports to indicate the average number of goals scored by a team or player per game.

Least-squares Regression Line

A straight line that minimizes the sum of the squared deviations of the data points from the line, used in linear regression analysis.

P-value

The probability of observing results as extreme as the results actually observed, under the assumption that the null hypothesis is true.