The Following Question Relates to PQR, Which Has the Following

Multiple Choice

The following question relates to PQR, which has the following ratios: return on assets, (ROA) 12 per cent; return on equity (ROE) 14 per cent; and current ratio (CR) of 1.8:1. The company purchased raw materials on credit for $400 000. This transaction will:

A) decrease ROA, ROE and CR.
B) decrease ROA and CR, but not ROE.
C) decrease ROA only.
D) have no effect.