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NEW QUESTION: 1

A. Option A
B. Option C
C. Option D
D. Option B
Answer: C

NEW QUESTION: 2






A. Option A
B. Option C
C. Option D
D. Option E
E. Option B
F. Option F
Answer: C

NEW QUESTION: 3

A. Option A
B. Option D
C. Option B
D. Option C
Answer: D

NEW QUESTION: 4
An investor has been given several financial ratios for an entity but none of the financial reports. Which combination of ratios can be used to derive return on equity?
A. Market-to-book-value ratio and total-debt-to-total-assets ratio.
B. Price-to-earnings ratio, earnings per share, and profit margin.
C. Price-to-earnings ratio and return-on-assets ratio.
D. Profit margin, total assets turnover, and equity multiplier.
Answer: D
Explanation:
The profit margin equals the profit available to ordinary shareholders divided by sales, the total assets turnover equals sales divided by total assets, and the product of these two ratios is the return on assets. This result is the basic Du Pont equation. In the extended Du Pont equation, the return on assets is multiplied by the leverage factor, also called the equity multiplier total assets + ordinary equity at carrying amount). The extended Du Pont equation gives the return on ordinary equity. This result is obtained because the total assets and sales factors cancel in the multiplication of the three ratios.