Which of the following firms would be expected to have a high ROE based on that firm's high operating efficiency?
A)a medical supply company that provides very precise instruments at a high price to large medical establishments such as hospitals
B)a high-end fashion retailer that has a very high mark-up on all items it sells
C)a brokerage firm that has high levels of leverage
D)a grocery store chain that has very high turnover,selling many multiples of their assets per year

Question

Quizplus · Accepted Answer

High operating efficiency is often measured by how effectively a company utilizes its assets to generate revenue. The grocery store chain with very high turnover is a good example of a firm that efficiently utilizes its assets, selling many multiples of their assets per year, hence generating a higher return on equity (ROE).

Which of the Following Firms Would Be Expected to Have