Which of the Following Could NOT Explain an Increase in the Return

question 40

Multiple Choice

Which of the following could NOT explain an increase in the return on equity ratio?

• A) Share buyback
• B) Declaring a final dividend
• C) Increase in profits
• D) Purchase of land on credit

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Definitions:

Current Asset

An asset on the company's balance sheet that is expected to be sold, consumed, or converted into cash within one year or during the normal operating cycle of the business.

Patents

Legal rights granted to inventors that prevent others from making, using, or selling an invention for a certain period of time.

Marketable Securities

Financial instruments that can be easily converted into cash because they have high liquidity and short maturities.

Financial Leverage

Employing the use of debt to boost the prospective profits of an investment, which in turn escalates the risk of experiencing a loss.