You Observe That a Firm's ROE Is Above the Industry

question 115

Multiple Choice

You observe that a firm's ROE is above the industry average,but both its profit margin and equity multiplier are below the industry average.Which of the following statements is CORRECT?

• A) Its total assets turnover must be above the industry average.
• B) Its return on assets must equal the industry average.
• C) Its TIE ratio must be below the industry average.
• D) Its total assets turnover must be below the industry average.
• E) Its total assets turnover must equal the industry average.

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Definitions:

Parol Evidence Rule

A legal principle in contract law that prevents parties from presenting extrinsic evidence of terms not included in the written contract.

Oral Evidence

Testimony or information presented in verbal form, as opposed to written or physical evidence, during legal proceedings.

Fraud

A deliberate deception practiced to secure unfair or unlawful gain, often involving financial transactions.

Guarantor

An individual or entity that agrees to be responsible for another’s debt or performance under a contract if the original party fails to meet their obligations.