USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
Given the following information evaluate the performance of Cloud Incorporated (CI).

-Refer to Exhibit 18.9. Calculate CI's overall performance.
A) 0.1225
B) 0.1000
C) 0.0525
D) 0.0475
E) 0.0325

Question

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
Given the following information evaluate the performance of Cloud Incorporated (CI).
 
-Refer to Exhibit 18.9. Calculate CI's overall performance.
A) 0.1225 
B) 0.1000 
C) 0.0525 
D) 0.0475 
E) 0.0325

Quizplus · Accepted Answer

To calculate CI's overall performance, we need to add up the three performance ratios given (profit margin, asset turnover, and return on assets) and multiply by the financial leverage ratio.

(0.10 + 0.70 + 0.20) x 0.50 = 0.10

Therefore, the overall performance ratio for CI is 0.10. Choice B is the correct answer.