Use the following data to compute each firm's net profit margin, total asset turnover, equity multiplier, and return on equity. (Note: The following dollar values are expressed in millions of U.S. dollars.) Firm A B C Common Equity Sales $28,141 $8,700 $10,636 $1,563 $5,641 $2,431 $18,158 $180 $28,199 $10,669 $9,516 $1,496 Total Assets Net Income Net Profit Margin 14.70% 0.99% Total Asset Turnover 3.22x 0.34x Referring to this data, which of the following conclusions is true about the companies' ROES? Equity Multiplier 3.23 2.64 Return on Equity Firm A's equity multiplier indicates that it has the lowest debt ratio of the three firms. O Compared to firms B and C, company A's exceptional ROE performance appears to result from its superior efficiency in using its asset base and its heavily leveraged capital structure. O Compared to firms B and C, company A does the best job of containing its costs and managing its tax obligations. O Compared to companies A and C, company B uses more financial leverage and exhibits the highest debt ratio.

Use the following data to compute each firm's net profit margin, total asset turnover, equity multiplier, and return on equity. (Note: The following dollar values are expressed in millions of U.S. dollars.) Firm A B C Common Equity Sales $28,141 $8,700 $10,636 $1,563 $5,641 $2,431 $18,158 $180 $28,199 $10,669 $9,516 $1,496 Total Assets Net Income Net Profit Margin 14.70% 0.99% Total Asset Turnover 3.22x 0.34x Referring to this data, which of the following conclusions is true about the companies' ROES? Equity Multiplier 3.23 2.64 Return on Equity Firm A's equity multiplier indicates that it has the lowest debt ratio of the three firms. O Compared to firms B and C, company A's exceptional ROE performance appears to result from its superior efficiency in using its asset base and its heavily leveraged capital structure. O Compared to firms B and C, company A does the best job of containing its costs and managing its tax obligations. O Compared to companies A and C, company B uses more financial leverage and exhibits the highest debt ratio.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter3: Evaluation Of Financial Performance

Section: Chapter Questions

Problem 10P

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