A firm with a low net profit margin can improve its return on total assets by ________.
A) increasing its debt ratio
B) increasing its total asset turnover
C) decreasing its fixed asset turnover
D) decreasing its total asset turnover

Question

Quizplus · Accepted Answer

By increasing its total asset turnover, the firm can generate more revenue with the same level of assets, which will improve its return on total assets. Increasing debt ratio may lead to higher interest expenses and financial risk. Decreasing fixed asset turnover or total asset turnover will lead to lower revenue and lower profitability.

A Firm with a Low Net Profit Margin Can Improve