The Following Question Relate to PQR, Which Has the Following

question 20

Multiple Choice

The following question relate to PQR, which has the following ratios: return on assets, (ROA) 12%; return on equity (ROE) 14%; and current ratio (CR) of 2:1.
-A customer provides a deposit of $500 000 near year-end.The product will not be delivered until next year.This transaction will:

• A) increase ROA and ROE,but decrease CR
• B) increase ROA and ROE,but have no effect on CR
• C) decrease CR,but have no effect on ROA or ROE
• D) decrease ROA and CR,but have no effect on ROE.

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Definitions:

Geometric Average Return

A method of calculating the average rate of return on an investment over time that accounts for compounding.

Returns

The profit or loss derived from investing or saving, often expressed as a percentage of the initial investment.

Canadian Common Stocks

Shares representing equity ownership in corporations based in Canada, entitling holders to vote on corporate matters and receive dividends.

Long Bonds

Bonds with a long duration to maturity, typically over 10 years, often associated with higher risk but higher yield.