If a firm produces a 12 percent return on assets and also a 12 percent return on equity,then the firm:
A)has no net working capital.
B)is using its assets as efficiently as possible.
C)has no debt of any kind.
D)also has a current ratio of 12.
E)has an equity multiplier of 1.2.

Question

Quizplus · Accepted Answer

If a firm has the same return on assets (ROA) and return on equity (ROE), it indicates that there is no financial leverage, meaning the firm has no debt.

If a Firm Produces a 12 Percent Return on Assets