Which of the Following Statements Is True

question 35

Multiple Choice

Which of the following statements is true?

• A) If the asset turnover ratio remains constant and the profit margin increases,return on assets must have increased.
• B) If return on assets increases,return on equity must increase.
• C) If the current ratio increases,the quick ratio will also increase.
• D) None of the answers provided.

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Definitions:

Depreciation

The systematic allocation of the depreciable amount of an asset over its useful life.

Useful Life

The estimated time period that an asset is expected to be usable for the purposes of a business before it becomes obsolete.

Salvage Value

The estimated residual value of an asset after its useful life has ended, and it can no longer be used for productive purposes.

Depreciation Expense

The charge to expense a portion of the cost of a fixed asset over its useful life, representing wear and tear, obsolescence, or decline in value.