Answer: D - TAT is always equal to ROI ÷ NPM. In this case, 5% ÷ 20% = 0.2, or 20%.

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CFP Certified Financial Planner Test Prep

Category - Foundation

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The company Panthers Limited has a return on investment (ROI) of 5% and it has a policy of a 20% net profit margin (NPM). What would be its total assets turnover (TAT) ratio?

35%
25%
10%
None of the above

Explanation

Answer: D - TAT is always equal to ROI $\div$ NPM. In this case, 5% $\div 20% = 0.2, or 20$ %.

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