If a Firm Produces a 12 Percent Return on Assets

question 12

Multiple Choice

If a firm produces a 12 percent return on assets and also a 12 percent return on equity,then the firm:

• A)has no net working capital.
• B)is using its assets as efficiently as possible.
• C)has no debt of any kind.
• D)also has a current ratio of 12.
• E)has an equity multiplier of 1.2.

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Definitions:

Dummy Variable

A variable used in regression analysis to represent subgroups of the sample in your study.

Nominal Independent Variable

A variable used in statistical analysis that represents categories without a natural order or ranking.

Indicator Variables

Binary variables that represent presence (1) or absence (0) of a characteristic.

Multiple Regression Model

A statistical procedure involving multiple predictor variables to calculate the outcome of a target variable.