A. Return on assets must beabove the industry average.B. Total assets turnover must beabove the industry average.C. Total assets turnover must bebelow the industry average.D. Statements a and b are correct.E. None of the statements aboveis correct. You observe that a firm?sprofit margin is below theindustry average, while itsreturn on equity and debtratio exceed the industryaverage. What can youconclude?

you observer the firm, the profit margin is below the industry average, while its return on equity…

Answered: ou observe that a firm?s rofit margin…

ou observe that a firm?s rofit margin is below the ndustry average, while its eturn on equity and debt atio exceed the industry

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter5: Risk Analysis

Section: Chapter Questions

Problem 2QE

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Question

A. Return on assets must be
above the industry average.
B. Total assets turnover must be
above the industry average.
C. Total assets turnover must be
below the industry average.
D. Statements a and b are correct.
E. None of the statements above
is correct.

You observe that a firm?s
profit margin is below the
industry average, while its
return on equity and debt
ratio exceed the industry
average. What can you
conclude?

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