Asked by Haley Adams on Jun 15, 2024
Verified
You observe that a firm's ROE is above the industry average,but its profit margin and debt ratio are both 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.
ROE
Return on Equity - a financial ratio that measures a company's profitability by revealing how much profit a company generates with the money shareholders have invested.
Debt Ratio
A financial ratio that measures the extent of a company's leverage, calculated by dividing total liabilities by total assets.
Profit Margin
Profit margin is a financial metric that measures the percentage of profit a company retains after subtracting its costs from its revenue, reflecting the overall profitability of the business.
- Analyze the influence of changes in sales and financial framework on organizational performance metrics.
- Understand the importance of asset management ratios in analyzing a firm.
Verified Answer
Learning Objectives
- Analyze the influence of changes in sales and financial framework on organizational performance metrics.
- Understand the importance of asset management ratios in analyzing a firm.
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