If a firm produces a return on assets of 15 percent and also a return on equity of 15 percent,then the firm:
A)has no debt of any kind.
B)is using its assets as efficiently as possible.
C)pays all its earnings out in dividends.
D)also has a current ratio of 15.
E)has an equity multiplier of 2.

Question

Quizplus · Accepted Answer

If a firm has the same return on assets (ROA) and return on equity (ROE), it indicates that the firm is not using any debt financing, as debt would increase the ROE compared to the ROA.

If a Firm Produces a Return on Assets of 15