If a companys net profit margin is 5 percent, its total asset turnover is 1.5 times,

Question:

If a company’s net profit margin is − 5 percent, its total asset turnover is 1.5 times, and its financial leverage ratio is 1.2 times, its return on equity is closest to:

a. −9.0 percent.

b. −7.5 percent.

c. −3.2 percent.

d. 1.8 percent.

Asset Turnover
Asset turnover is sales divided by total assets. Important for comparison over time and to other companies of the same industry. This is a standard business ratio.

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