Selected financial information gathered from the Matador Corporation follows:
A．
B．2007
C．2006
D．2005
E．Average debt
F．$ 792000
F．$ 800000
F．$ 820000
F．Average equity
F．$ 215000
F．$ 294000
F．$ 364000
F．Return on assets
F．5.9%
F．6.6%
F．7.2%
F．Quick ratio
F．0.3
F．0.5
F．0.6
F．Sales
F．$1650000
F．$1452000
F．$1304000
F．Cost of goods sold
F．$ 1345000
F．$1176000
F．$1043000
参考答案：A
解析：Leverage increased as measured by the debt-to-equity ratio from 2.25 in 2005 to 3.68 in 2007. Liquidity worsened as measured by the quick ratio from 0.6 in 2005 to 0.3 in 2007. Gross profit margin declined from 20.0% in 2005 to 18.5% in 2007. Return on equity has improved since 2005. One measure of ROE is ROA×financial leverage. Financial leverage (assets/equity) can be derived by adding 1 to the debt-to-equity ratio. In 2005, ROE was 23.4% [7.2% ROA×(1 +2.25 debt-to-equity)]. In 2007, ROE was 27.6% [5.9% ROA×(1 +3.68 debt-to-equity)].