If a Firm Produces a 10% Return on Assets and Also

question 113

Multiple Choice

If a firm produces a 10% return on assets and also a 10% return on equity,then the firm:

• A) has no debt of any kind.
• B) is using its assets as efficiently as possible.
• C) has no net working capital.
• D) also has a current ratio of 10.
• E) has an equity multiplier of 2.

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Definitions:

Asthenosphere

A region of the Earth's mantle lying below the lithosphere, characterized by relatively low viscosity and mechanical weakness.

Lithosphere

The hard external layer of Earth, made up of the crust and the top section of the mantle.

Driving Forces

Factors or energies that lead to changes in a physical system or environment, often initiating or influencing processes.

Resisting Forces

Forces that oppose motion or movement, including friction, air resistance, and tension, which work against the direction of motion.