QUESTIONS 45 THROUGH 68 RELATE TO FINANCIAL STATEMENT ANALYSIS

46. Assume U.S. GAAP (generally accepted accounting principles) applies unless

otherwise noted.

Two companies operating in the same industry both achieved the same return on

equity with the same net sales, but the two companies were different with respect

to return on total assets. Compared with the company that had the higher return

on total assets, the company with the lower return on total assets most likely had a

higher:

A. total asset turnover.

B. financial leverage multiplier.

C. proportion of common equity in its capital structure.