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The following DuPont framework ratios are for Scary Company and Excellent Company: Return on Sales Asset Turnover Assets-to-Equity Scary 4% 2.0 2.0 Excellent 3% 3.5

The following DuPont framework ratios are for Scary Company and Excellent Company:

Return on Sales Asset Turnover Assets-to-Equity

Scary 4% 2.0 2.0

Excellent 3% 3.5 2.0

Excellent Company is viewed as the best company in Scary's industry, the company against which all other companies in the industry compare themselves.

Which ONE of the following statements is TRUE?

Scary Company has an efficiency problem.
Scary Company has a liquidity problem
Scary Company has a profitability problem.
Scary Company has a leverage problem.

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