Chapter 14 Practice Test Question 16 13 Ratios Using the firm's data provided below explain why the firm's ROA is less than the industry average of 59% given that the industry average asset turnover is 1.22 4 points $150 (mil) 70 15 $125 30 $ 35 Sales Skipped EBIT Interest Expense Assets Equity ok Net Profit Print Multiple Choice References The firm uses less debt than the industry. The firm is not generating enough sales from assets and has too much debt. The firm is not generating enough sales from assets and has too high operating costs The firm has too high an interest burden ratio. Chapter 14 Practice Test Question 17 14 Asset Ratios Glowworms Inc has sales of $250,000, cost of goods sold of $175,000, average inventory of $45,000 and average receivables of $55,000. Industry average inventory period is 45 days and industry average days sales in receivables is 60 days. All else the same, which of the following conclusions about Glowworm's ROA is correct? 4 points Skipped Multiple Choice eBook Glowworms has a lower ROA than the industry average. Print References One can't tell whether Glowworms has a higher or lower ROA than the industry average because the inventory period is higher than the industry average but their days sales in receivables are lower than the industry average Glowworms has a higher ROA than the industry average. One can't tell whether Glowworms has a higher or lower ROA than the industry average because the inventory period is lower than thhe industry average but their days sales in receivables are higher than the industry average