You Are Given the Following Information About a Firm: the Growth

question 117

Multiple Choice

You are given the following information about a firm: The growth rate equals 8 percent;return on assets (ROA) is 10 percent;the debt ratio is 20 percent;and the stock is selling at $36.What is the return on equity (ROE) ?

• A) 14.0%
• B) 12.5%
• C) 15.0%
• D) 2.5%
• E) 13.5%

Identify the standard components of business letters.

Recognize the significance of using the correct date format in business documents.

Understand the correct placement of various elements in business letters.

Recognize the structure and essential components of memos.

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Definitions:

Sold

Refers to the completion of a transaction where goods or services are exchanged for payment.

Recording Depreciation

The process of allocating the cost of a tangible asset over its useful life to reflect its decrease in value over time.

Expense Recognition Principle

An accounting principle stating that expenses should be recorded in the period in which they contribute to revenue, not necessarily when the expense is paid.

Fully Depreciated

An asset has reached the end of its useful life, and its book value is reduced to salvage value or zero.