1. Which of the following situations best correspond with a ratio of “sales to average net tangible assets” exceeding the industry norm? (Choose one answer.)

a. A company expanding plant and equipment during the past three years.

b. A company inefficiently using its assets.

c. A company with a large proportion of aged plant and equipment.

d. A company using straight-line depreciation.

2. A measure of asset utilization (turnover) is (choose one answer):

a. Sales divided by average long-term operating assets.

b. Return on net operating assets

c. Return on common equity.

d. NOPAT divided by sales.

3. Return on net operating assets depends on the (choose one answer):

a. Interest rates and pretax profits.

b. Debt-to-equity ratio.

c. After-tax operating profit margin and NOA turnover.

d. Sales and total assets.