A Company Has Return on Assets of -10

question 27

Multiple Choice

A company has return on assets of -10%.Return on sales are -6%.The leverage ratio is 3.0.Following DuPont analysis,what is return on equity?

• A)-6%
• B)-10%
• C)-30%
• D)-48%

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Definitions:

Short-run Equilibrium

A state in which market supply and demand balance each other, and as a result, prices become stable, often in a temporal context.

Marginal Cost

The cost of producing one additional unit of a product, which can vary as production scales up or down.

Economic Losses

Financial deficits incurred by an individual, organization, or economy stemming from events or actions that reduce wealth or resources.

Constant-cost Industry

An industry in which the input prices do not change as the industry output changes, leading to a supply curve that is perfectly elastic.