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 its assets per year
E)a mining firm that is mostly engaged in exploration for new deposits

Question

Quizplus · Accepted Answer

The grocery store chain with high turnover is expected to have a high ROE based on its operating efficiency, as this indicates that it is generating a high level of sales relative to its assets. This suggests that the company is utilizing its resources effectively and generating profits for its shareholders. The other choices do not necessarily indicate high operating efficiency and may not necessarily lead to a high ROE.

Which of the Following Firms Would Be Expected to Have