Which of the Following Statements Is True

question 40

Multiple Choice

Which of the following statements is true?

• A)The return on assets ratio indicates whether the company can pay its current debt when it becomes due.
• B)The causes for an increase or decrease in the return on assets ratio can be examined by calculating its two components: return on sales and asset turnover.
• C)If a company successfully applies leverage,its return on assets ratio will be greater than its return on common stockholders' equity ratio.
• D)If a company's return on assets ratio increases,the increase can be the result of decreased liquidity.

---

Definitions:

Equilibrium Quantity

The quantity of goods or services that is supplied and demanded at the equilibrium price in a market.

Unregulated Market

A market where economic activities are freely carried out without governmental intervention in terms of prices, production, and distribution.

Shortage

A situation where the demand for a product or service exceeds the supply available at a specific price.

Product

Any good, service, or idea that can be offered to a market to satisfy a want or need.