[amp_mcq option1=”high return on equity” option2=”high return on assets” option3=”low return on assets” option4=”low return on equity” correct=”option3″]
The correct answer is: C. low return on assets
A company with low earning power and high interest cost will have a low return on assets. This is because the company is not generating enough profit to cover its interest costs, which means that it is not making a profit on its assets. This can be a sign of financial trouble, and the company may need to take steps to improve its financial situation.
Here is a brief explanation of each option:
- A. high return on equity – This is not the correct answer because a company with low earning power and high interest cost will not have a high return on equity.
- B. high return on assets – This is not the correct answer because a company with low earning power and high interest cost will not have a high return on assets.
- C. low return on assets – This is the correct answer because a company with low earning power and high interest cost will have a low return on assets.
- D. low return on equity – This is not the correct answer because a company with low earning power and high interest cost will not have a low return on equity.