A Company Has Return on Assets of 8

question 101

Multiple Choice

A company has return on assets of 8%.Return on sales are 4%.The leverage ratio is 3.0.Following DuPont analysis,what is return on equity?

• A)4%
• B)8%
• C)24%
• D)12%

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Definitions:

For The Month

A phrase typically used to specify financial or operational activities or measurements within a specific month.

Variable Costing

An accounting method that only includes variable costs (costs that change with production levels) in the cost of goods sold and calculates fixed costs as period costs.

Net Operating Income

The total revenue from a business's operations minus its operating expenses, excluding taxes and interest.

Operating Loss

A situation where a company's operating expenses exceed its gross profits, indicating a negative profitability from business operations.