Which of the following is true?

Firm B shall improve its total asset turnover ratio since it is lower than the industry average and thus indicates an inefficient utilization of assets. 

Firm B shall restructure its capital structure to achieve a lower financial leverage since it appears to be higher than the industry average. 

Firm A shall improve its total asset turnover ratio since it is higher than the industry average and thus indicates an inefficient utilization of assets. 

Firm A shall restructure its capital structure to achieve a lower financial leverage since it appears to be higher than the industry average.

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You are given the information of firm A and B for their performance evaluation. Firm A B 60 55 20 18 72 40 Sales EAT Total Assets 75 Stockholder's Equity 40 Suppose the industry average of net profit margin ratio, total asset turnover and equity multiplier is around 30%, 0.78 times and 1.9 respectively. You are given the information of firm A and B for their performance evaluation. Firm A B 60 55 20 18 72 40 Sales EAT Total Assets 75 Stockholder's Equity 40 Suppose the industry average of net profit margin ratio, total asset turnover and equity multiplier is around 30%, 0.78 times and 1.9 respectively.

Answer rating: 100% (QA)

The net profit margin ratio total asset turnover and equity multiplier for firm A are as follows Net ... View the full answer