a.
Introduction:
Requirement 1
Total amount of assets invested in A and G in the current year.
b.
Introduction: The return on assets is a financial ratio which states that how profitably a company has employed its assets. In other words, how the company has utilized its assets to generate income.
Requirement 2
The return on assets of the company for the current year of A and G.
c.
Introduction: Expenses are incurred to generate revenues and thus, form an essential part of the income statement.
Requirement 3
The total expenses of the A and G company for the current year.
d.
Introduction: Comparison between similar companies in the same industry is crucial to the assessment of the company’s performance. A company’s financial ratios, when compared with the industry data, can reveal lots of valuable information which the financial statements can not reveal.
Requirement 4
The A’s and G’s return on assets for the current year is better or worse than the competitor’s average return.
e.
Introduction: Investors greatly rely on financial or accounting ratios along with the financial statements before making decisions for investing in a particular company. The limitations of financial statements can be removed by incorporating the ratios into the analysis and making investment decisions.
Requirement 5
Whether one should invest in G or A company based on return on assets.
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Chapter 1 Solutions
FINANCIAL & MANAG ACCT (CH. 1 - 24 EBOOK
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