observe that a firm's ROE is above the industry average, but its profit margin and debt ratio are both below the industry average.Which of the following statements is CORRECT?
A)Its total assets turnover must be above the industry average.
B)Its return on assets must equal the industry average.
C)Its TIE ratio must be below the industry average.
D)Its total assets turnover must be below the industry average.
E)Its total assets turnover must equal the industry average.

Question

Quizplus · Accepted Answer

Since the firm's ROE is above the industry average, but its profit margin and debt ratio are below the industry average, the firm must have a higher total assets turnover to compensate and achieve a higher ROE.

Observe That a Firm's ROE Is Above the Industry Average