Assume JustDoIt Co.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

When operating efficiency improves and costs decrease while sales remain constant, the company's net income increases. This leads to an increase in return on equity (ROE), as ROE is calculated as net income divided by shareholders' equity.