General Accounting Firm A and B have debt-total asset ratiosof 35% and 30% and ROA of 12% and11%, respectively. Which firm has agreater ROE?

Step 1: Define Return on equityReturn on equity is a profitability ratio that shows the financial…

Answered: Firm A and B have debt-total asset…

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter12: Fainancial Statement Analysis

Section: Chapter Questions

Problem 24MCQ: When analyzing a companys debt to equity ratio, lithe ratio has a value that is greater than one,...

See similar textbooks

Similar questions

Assuming Target’s industry had an average current ratio of 1.0 and an average debtto equity ratio of 2.5, comment on Target’s liquidity and long-term solvency.
Assume the following relationships for the Caulder Corp.:Sales/Total assets 1.3×Return on assets (ROA) 4.0%Return on equity (ROE) 8.0%Calculate Caulder’s profit margin and debt-to-capital ratio assuming the firm uses only debt andcommon equity, so total assets equal total invested capital
How do you determine the mix (percentages or weights) of debt vs equity from the Debt to Equity (D/E) Ratio? For example, if a company has a D/E Ratio = .667, what is the percentage of debt, of equity? For example, if a company has a D/E Ratio = 1, what is the percentage of debt, of equity? For example, if a company has a D/E Ratio = 1.5, what is the percentage of debt, of equity?
Can you please give correct answer for this accounting question?
A company has: Return on Asset 0.08 Cost of the debt 0.04. What is the Cost of Equity if the debt-equity ratio is 0.58
A firm has a debt-equity ratio of 1.10. What is the total Debt ratio? A) 0.52 B) 1.10
Assume the following relationship for Woody Corp: Sales/Total Assets is 1.5x, ROA is 3%, and ROE is 5.0%. Calculate the following assuming Woody uses only debt and common equity. What is the Debt-to-Asset Ratio?
A firm has a debt -to -equity of 0.69 and a market -to- book ratio of 3.0. What is the ratio of the book value of debt to the market value of equity
Find the debt-to-value ratio for a firm with a debt-to-equity ratio of 4½.
F&G Co. has an equity multiplier of 2.4, and its assets are financed with some combination of long-term debt and common equity. What is its debt-to-assets ratio?
Assume the following relationships for the Caulder Corp.: Sales/Total assets Return on assets (ROA) Return on equity (ROE) Calculate Caulder's profit margin and debt-to-capital ratio assuming the firm uses only debt and common equity, so total assets equal total invested capital. Do not round intermediate calculations. Round your answers to two decimal places. Profit margin: Debt-to-capital ratio: % % 1.9x 8.0% 13.0%
Assume the following relationships for the Caulder Corp.:Sales/Total assets 1.33Return on assets (ROA) 4.0%Return on equity (ROE) 8.0%Calculate Caulder’s profit margin and debt-to-capital ratio assuming the firm uses onlydebt and common equity, so total assets equal total invested capital.

SEE MORE QUESTIONS

Recommended textbooks for you

Cornerstones of Financial Accounting

Accounting

ISBN:

9781337690881

Author:

Jay Rich, Jeff Jones

Publisher:

Cengage Learning

Intermediate Financial Management (MindTap Course…

Finance

ISBN:

9781337395083

Author:

Eugene F. Brigham, Phillip R. Daves

Publisher:

Cengage Learning

Entrepreneurial Finance

Finance

ISBN:

9781337635653

Author:

Leach

Publisher:

Cengage

Cornerstones of Financial Accounting

Accounting

ISBN:

9781337690881

Author:

Jay Rich, Jeff Jones

Publisher:

Cengage Learning

Intermediate Financial Management (MindTap Course…

Finance

ISBN:

9781337395083

Author:

Eugene F. Brigham, Phillip R. Daves

Publisher:

Cengage Learning

Entrepreneurial Finance

Finance

ISBN:

9781337635653

Author:

Leach

Publisher:

Cengage

Corporate Fin Focused Approach

Finance

ISBN:

9781285660516

Author:

EHRHARDT

Publisher:

Cengage

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

SEE MORE TEXTBOOKS

Firm A and B have debt-total asset ratios of 35% and 30% and ROA of 12% and 11%, respectively. Which firm has a greater ROE?