What happens if a business makes $900 in sales? O assets increase and liabilities increase O assets increase and owner's equity increases Oliabilities decrease and assets decrease assets increase and owner's equity decreases
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- Under what situation will return on equity be higher than return on investment? a. When assets exceed liabilities. b. When the debt to equity ratio is greater than 1.0. c. When net income is higher than it was in the previous year. d. When a company earns more on borrowed money than the interest it must pay.Which of the following generally indicates an improvement in a company’s financial position? The times interest earned ratio declines The days sales outstanding ratio increases The quick Ratio increases The current ratio declines The total assets turnover ratio decreasesWhich of the following statements is true? O A. Profit margin is calculated by dividing total assets by sales. B. Return on Equity rises if equity increases and net income remain constant. C. A 10% increase in cash will lead to a greater Cash Ratio O D. The current ratio increases if the current liabilities increase
- f The 'gross profit margin' ratio shows: a. The overall effectiveness of management in generating profits with available assets b. The contribution from the firm's core business towards covering the firm's operating expenses C. The percentage of sales remaining after everything else have been deducted X Od. This ratio measures how much the owners get back on their investmentsA. What is the company’s gross profit margin?B. What is the company’s inventory turnover?C. What is the company’s current ratio?D. What is the company’s return on asset?E. What is the company’s net profit margin? F. What is the company’s days receivable?G. What is the company’s quick ratio?Return on asset is a term often used to express income earned on capital invested in a business unit. A company’s return on asset increases if Sales increase by the same peso amount as expenses and total assets Sales remain the same and expenses are reduced by the same pace amount the total assets increase Sales decrease by the same peso amount the expenses increase Net profit margin on sales increases by the same percentage as total assets
- Which of the following would indicate an improvement in a company's financial position, holding other things constant? The profit margin declines. O The MV/BV ratio increases. The ROA decreases. The TIE increases. O The liability-to-asset ratio increases.Current Ratio. What effect would the following actions have on a firm's current ratio? Assume that net working capital is positive. a. Inventory is purchased. b. A supplier is paid. c. A short-term bank loan is repaid. d. A long-term debt is paid off early. e. A customer pays off a credit account. f. Inventory is sold at cost. g. Inventory is sold for a profit. LO 3.2The Wilson Corporation has the following relationships: Sales/Total assets 2.0 Return on assets (ROA) 4.0% Return on equity (ROE) 6.0% What is Wilson's profit margin and debt ratio? (Ctrl) num k 8 # $ 9 7 8 3 4 5 6 5 6 Y E R 2.
- Below is an equation that breaks down the concept of Return on Equity into its components (individual parts). ROE = Net income Sales Net Profit margin Sales Total assets Asset turnover ROA X Total assets Total equity Equity multiplier Using this equation, explain briefly how a company can improve its Return on Assets (ROA), and the impact of this improvement on its Return on Equity (ROE). Is an improvement in ROA that the only way that ROE can increase?What would be the effect on a business profit, which has been calculated taking closing stock value less by OMR 1000 than its actual amount?Gross Profit Ratio for a firm remains same but the Net Profit Ratio is decreasing. The reason for such behavior could be: A. Increase in Costs of Goods Sold, B. If Increase in Expense, C. Increase in Dividend, D. Decrease in Sales.