If a firm produces a 10 % return on assets and also a 10 % return on equity, then the firm:

A) Has no debt of any kind.
B) Is using its assets as efficiently as possible.
C) Has no net working capital.
D) Also has a current ratio of 10.
E) Has an equity multiplier of 2.

Return on Equity

A measure of a corporation's profitability, indicated by the amount of net income returned as a percentage of shareholders equity.

Return on Assets

A financial ratio indicating how efficiently a company uses its assets to generate profit.

Equity Multiplier

An equity multiplier is a financial ratio that measures the proportion of a company’s total assets financed by its shareholders' equity, demonstrating the degree of financial leverage being used.