If a company produces a return on assets of 14 percent and also a return on...
If a company produces a return on assets of 14 percent and also a return on equity of 14 percent, then the firm:
Multiple Choice
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may have short-term, but not long-term debt.
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is using its assets as efficiently as possible.
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has no net working capital.
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has a debt-equity ratio of 1.0.
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has an equity multiplier of 1.0.
Homework Answers
A company’s return on assets and return on equity will equals will equal only when equity equals assets.
Equity multiplier = Total assets/Sales
Hence, correct option is “has an equity multiplier 1.0”
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If a company produces a return on assets of 14 percent and also
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