单选题 Selected financial information gathered from the Matador Corporation follows:

	2007	2006	2005
Average debt	$ 792000	$ 800000	$ 820000
Average equity	$ 215000	$ 294000	$ 364000
Return on assets	5.9%	6.6%	7.2%
Quick ratio	0.3	0.5	0.6
Sales	$1650000	$1452000	$1304000
Cost of goods sold	$ 1345000	$1176000	$1043000

Using only the data presented, which of the following statements is most correct?

A、 Return on equity has improved.
B、 Leverage has declined.
C、 Liquidity has improved.

【正确答案】 A

【答案解析】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)].