Assume J.K.Lumber increases its operating efficiency such that costs decrease while sales remain constant.As a result,given all else constant,the
A)equity multiplier will decrease.
B)return on assets will decrease.
C)profit margin will decline.
D)return on equity will increase.
E)total asset turnover will increase.

Question

Quizplus · Accepted Answer

If J.K. Lumber increases its operating efficiency and decreases costs, it can lead to an increase in return on equity (ROE) as net income increases. The formula for ROE is net income divided by equity, so if net income increases, ROE increases. Additionally, all other options are incorrect as they are not directly affected by changes in operating efficiency while keeping sales constant.

Assume JKLumber Increases Its Operating Efficiency Such That Costs Decrease While