Ramer Company and Matson Company
Assume the Following Information

question 16

Multiple Choice

Ramer Company and Matson Company
Assume the following information for Ramer Company, Matson Company, and for their common industry for a recent year.
$\begin{array}{llll}&\text { Ramer } & \text { Matson } & \text { Industry Average }\\\text { Current ratio } & 3.50 & 2.80 & 3.00 \\\text { Accounts receivable turnover } & 5.00 & 8.10 & 6.00 \\\text { Inventory tumover } & 6.20 & 8.00 & 6.10 \\\text { Interest coverage ratio } & 9.00 & 12.30 & 10.40 \\\text { Debt-equity ratio } & 0.70 & 0.40 & 0.55 \\\text { Retum on investment } & 0.15 & 0.12 & 0.15 \\\text { Dividend payout ratio } & 0.80 & 0.60 & 0.55 \\\text { Earnings per share } & \$ 3.00 & \$ 2.00 & -\end{array}$ (CMA adapted, Jun 90 #18) Regarding the data for Ramer and Matson Company, if a company is profitable and is effectively using leverage, which one of the following ratios is likely to be the largest?

• A)return on total assets
• B)return on operating assets
• C)return on common equity
• D)return on investment
• E)none of the above

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Definitions:

Intrauterine Device (IUD)

A form of birth control placed inside the uterus to prevent pregnancy by altering the environment for sperm and eggs.

STIs

Sexually Transmitted Infections, a term encompassing various infectious diseases spread through sexual contact.

Toxic Shock Syndrome

A rare, life-threatening complication of certain bacterial infections, often associated with tampon use in menstruating women.

Intrauterine Device (IUD)

A small, T-shaped device inserted into the uterus by a healthcare provider as a method of long-term contraception.