A Company Has Return on Assets of -10

question 92

Multiple Choice

A company has return on assets of -10%.Return on sales are -5%.The leverage ratio is 2.0.Following DuPont analysis,what is return on equity?

• A)-5%
• B)-10%
• C)-20%
• D)-30%

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Definitions:

Affect Inventories

Influences on the quantity, value, or type of products a business holds for sale, resulting from factors like demand fluctuations and supply chain issues.

Expense Recognition Principle

An accounting guideline that expenses should be recognized in the period in which they are incurred, regardless of when the payment is made.

Cost Of Goods Sold

Direct expenses involved in producing goods for sale by a company, covering both materials and workforce costs.

Ending Merchandise Inventory

The final value of goods available for sale at the end of an accounting period, before any new inventory has been added.