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For the current year, Company A had sales of $350,000, net income of $250,000, and average common Stockholders' Equity of $900,000. During the same year, Company B had sales of $210,000 net income of $180,000, and average common Stockholders' Equity of $440,000. Which of the following statements is TRUE regarding this situation?. A. Company A has a better return on equity, $250,000 compared to Company B's $180,000. B. Company B has a better return on equity, 40.91% compared to Company A's 27.78%. C. Company A has a better return on equity, $350,000 compared to Company B's $210,000 D. Company B has a better return on equity, 85.71% compared to Company A's 71.43%.

For the current year, Company A had sales of $350,000, net income of $250,000, and average common Stockholders' Equity of $900,000. During the same year, Company B had sales of $210,000 net income of $180,000, and average common Stockholders' Equity of $440,000. Which of the following statements is TRUE regarding this situation?. A. Company A has a better return on equity, $250,000 compared to Company B's $180,000. B. Company B has a better return on equity, 40.91% compared to Company A's 27.78%. C. Company A has a better return on equity, $350,000 compared to Company B's $210,000 D. Company B has a better return on equity, 85.71% compared to Company A's 71.43%.

EBK CONTEMPORARY FINANCIAL MANAGEMENT
EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter3: Evaluation Of Financial Performance
Section: Chapter Questions
Problem 13P
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For the current year, Company A had sales of $350,000, net income of $250,000, and average common Stockholders' Equity of $900,000. During the same year, Company B had sales of $210,000 net income of $180,000, and average common Stockholders' Equity of $440,000. Which of the following statements is TRUE regarding this situation?. A. Company A has a better return on equity, $250,000 compared to Company B's $180,000. B. Company B has a better return on equity, 40.91% compared to Company A's 27.78%. C. Company A has a better return on equity, $350,000 compared to Company B's $210,000 D. Company B has a better return on equity, 85.71% compared to Company A's 71.43%.
Transcribed Image Text:For the current year, Company A had sales of $350,000, net income of $250,000, and average common Stockholders' Equity of $900,000. During the same year, Company B had sales of $210,000 net income of $180,000, and average common Stockholders' Equity of $440,000. Which of the following statements is TRUE regarding this situation?. A. Company A has a better return on equity, $250,000 compared to Company B's $180,000. B. Company B has a better return on equity, 40.91% compared to Company A's 27.78%. C. Company A has a better return on equity, $350,000 compared to Company B's $210,000 D. Company B has a better return on equity, 85.71% compared to Company A's 71.43%.
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