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A). All other things being equal, the higher a company's net margin, the better its performance. This statement is true or false?
B).The following information was drawn from the accounting records of Jones Company.
| | | | |
| Net sales | $ | 400,000 | |
| Net income | | 50,000 | |
| Average total assets | | 500,000 | |
| Average total liabilities | | 300,000 | |
| Average total stockholders' equity | | 200,000 | |
| (1). Based on this information the company's asset turnover is a. Multiple Choice b. $0.80 of sales dollars per $1 of assets. c. $1.25 of sales dollars per $1 of assets. d. $1.00 of sales dollars per $1 of assets. e. None of the choices is correct. |
(2).Based on this information, the company's return on investment (also known as return on assets) is
Multiple Choice
a. The answer cannot be determined from the information provided.
b. 25.0%.
c. 12.5%.
d. 10.0%.
C). A company's return on equity (ROE) was higher than its return on investment (ROI). What could have caused this difference?
Multiple Choice
a. The company's ROI was higher than its cost of debt.
b. The company's ROI was lower than its cost of debt.
c. The company's ROI was equal to its cost of debt.
d. None of the answers provides an explanation as to why the two ratios would have differed.
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