(a) To identify: Company which is most profitable according to its return on assets. Return on Total Assets Ratio: Measurement of a company’s earnings against its net assets is known as return on total assets ratio. Debt and Equity Ratio: Debt equity ratio is incorporated with debt and equity or shareholder’s equity used in the company. This financial ratio represents share of ‘debt’ which includes short term debt as well as long term debt and ‘equity’.

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Answer 1

Question

Chapter 2, Problem 10BTN

To determine

(a)

To identify:

Company which is most profitable according to its return on assets.

Return on Total Assets Ratio:

Measurement of a company’s earnings against its net assets is known as return on total assets ratio.

Debt and Equity Ratio:

Debt equity ratio is incorporated with debt and equity or shareholder’s equity used in the company. This financial ratio represents share of ‘debt’ which includes short term debt as well as long term debt and ‘equity’.

To determine

(b)

To identify:

Most risky company according to the debt ratio.

Explanation:

Debt ratio of S, A and G Company is 26.1%, 58.9% and 18.4% respectively.

Higher the ratio more risky will be the company.

Here A Company has the highest ratio which shows high risk.

Thus, A Company is the most risky company according to debt ratio.

(c)

To identify:

Company deserves increased investment based on a joint analysis of return on assets and debt ratio.

Explanation:

A Company is a more risky company since it has the highest debt equity ratio as compared with S Company and G Company.

Whereas G Company has the lowest debt equity ratio as compared with A Company and S Company.

These two ratios are entirely different on the basis of which comparison is quite incomplete.

Hence, these ratios do not tell about the investment related aspects.

To determine

(c)

To identify:

Company deserves increased investment based on a joint analysis of return on assets and debt ratio.

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The industrial enterprise "HUANG S.A." purchased a sorting and packaging machine from a foreign company on 1/4/2017 at a cost of €500,000. The useful life of the machine was estimated by the Management at ten (10) years, while the residual value was estimated at zero. For the transportation of the machine from abroad to the company's factory, the amount of €20,000 was paid on 15/4/2017. As the insurance coverage of the machine during transportation was the responsibility of the selling company, HUANG S.A. proceeded to insure the machine from 16/4/2017 to 15/4/2018, paying the amount of €1,200. The delivery took place on 15/4/2017. As adequate ventilation of the multifunction device is essential for its proper operation, the company fitted an air duct on the multifunction device. The cost of the air duct amounted to €2,000 and was paid on 20/4/2017. On 25/4/2017, an external electrician was paid €5,000 for the electrical connection of the device. The company also paid €5,000 to an…

Answer 2

Question

Chapter 2, Problem 10BTN

To determine

(a)

To identify:

Company which is most profitable according to its return on assets.

Return on Total Assets Ratio:

Measurement of a company’s earnings against its net assets is known as return on total assets ratio.

Debt and Equity Ratio:

Debt equity ratio is incorporated with debt and equity or shareholder’s equity used in the company. This financial ratio represents share of ‘debt’ which includes short term debt as well as long term debt and ‘equity’.

To determine

(b)

To identify:

Most risky company according to the debt ratio.

Explanation:

Debt ratio of S, A and G Company is 26.1%, 58.9% and 18.4% respectively.

Higher the ratio more risky will be the company.

Here A Company has the highest ratio which shows high risk.

Thus, A Company is the most risky company according to debt ratio.

(c)

To identify:

Company deserves increased investment based on a joint analysis of return on assets and debt ratio.

Explanation:

A Company is a more risky company since it has the highest debt equity ratio as compared with S Company and G Company.

Whereas G Company has the lowest debt equity ratio as compared with A Company and S Company.

These two ratios are entirely different on the basis of which comparison is quite incomplete.

Hence, these ratios do not tell about the investment related aspects.

To determine

(c)

To identify:

Company deserves increased investment based on a joint analysis of return on assets and debt ratio.

Expert Solution & Answer

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Check out a sample textbook solution

See solution

Answer 3

Question

Chapter 2, Problem 10BTN

To determine

(a)

To identify:

Company which is most profitable according to its return on assets.

Return on Total Assets Ratio:

Measurement of a company’s earnings against its net assets is known as return on total assets ratio.

Debt and Equity Ratio:

Debt equity ratio is incorporated with debt and equity or shareholder’s equity used in the company. This financial ratio represents share of ‘debt’ which includes short term debt as well as long term debt and ‘equity’.

To determine

(b)

To identify:

Most risky company according to the debt ratio.

Explanation:

Debt ratio of S, A and G Company is 26.1%, 58.9% and 18.4% respectively.

Higher the ratio more risky will be the company.

Here A Company has the highest ratio which shows high risk.

Thus, A Company is the most risky company according to debt ratio.

(c)

To identify:

Company deserves increased investment based on a joint analysis of return on assets and debt ratio.

Explanation:

A Company is a more risky company since it has the highest debt equity ratio as compared with S Company and G Company.

Whereas G Company has the lowest debt equity ratio as compared with A Company and S Company.

These two ratios are entirely different on the basis of which comparison is quite incomplete.

Hence, these ratios do not tell about the investment related aspects.

To determine

(c)

To identify:

Company deserves increased investment based on a joint analysis of return on assets and debt ratio.

Expert Solution & Answer

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Check out a sample textbook solution

See solution

Answer 4

Question

Chapter 2, Problem 10BTN

To determine

(a)

To identify:

Company which is most profitable according to its return on assets.

Return on Total Assets Ratio:

Measurement of a company’s earnings against its net assets is known as return on total assets ratio.

Debt and Equity Ratio:

Debt equity ratio is incorporated with debt and equity or shareholder’s equity used in the company. This financial ratio represents share of ‘debt’ which includes short term debt as well as long term debt and ‘equity’.

To determine

(b)

To identify:

Most risky company according to the debt ratio.

Explanation:

Debt ratio of S, A and G Company is 26.1%, 58.9% and 18.4% respectively.

Higher the ratio more risky will be the company.

Here A Company has the highest ratio which shows high risk.

Thus, A Company is the most risky company according to debt ratio.

(c)

To identify:

Company deserves increased investment based on a joint analysis of return on assets and debt ratio.

Explanation:

A Company is a more risky company since it has the highest debt equity ratio as compared with S Company and G Company.

Whereas G Company has the lowest debt equity ratio as compared with A Company and S Company.

These two ratios are entirely different on the basis of which comparison is quite incomplete.

Hence, these ratios do not tell about the investment related aspects.

To determine

(c)

To identify:

Company deserves increased investment based on a joint analysis of return on assets and debt ratio.

Expert Solution & Answer

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Check out a sample textbook solution

See solution

Answer 5

Chapter 2, Problem 10BTN

To determine

(a)

To identify:

Company which is most profitable according to its return on assets.

Return on Total Assets Ratio:

Measurement of a company’s earnings against its net assets is known as return on total assets ratio.

Debt and Equity Ratio:

Debt equity ratio is incorporated with debt and equity or shareholder’s equity used in the company. This financial ratio represents share of ‘debt’ which includes short term debt as well as long term debt and ‘equity’.

To determine

(b)

To identify:

Most risky company according to the debt ratio.

Explanation:

Debt ratio of S, A and G Company is 26.1%, 58.9% and 18.4% respectively.

Higher the ratio more risky will be the company.

Here A Company has the highest ratio which shows high risk.

Thus, A Company is the most risky company according to debt ratio.

(c)

To identify:

Company deserves increased investment based on a joint analysis of return on assets and debt ratio.

Explanation:

A Company is a more risky company since it has the highest debt equity ratio as compared with S Company and G Company.

Whereas G Company has the lowest debt equity ratio as compared with A Company and S Company.

These two ratios are entirely different on the basis of which comparison is quite incomplete.

Hence, these ratios do not tell about the investment related aspects.

To determine

(c)

To identify:

Company deserves increased investment based on a joint analysis of return on assets and debt ratio.

Answer 6

Chapter 2, Problem 10BTN

To determine

(a)

To identify:

Company which is most profitable according to its return on assets.

Return on Total Assets Ratio:

Measurement of a company’s earnings against its net assets is known as return on total assets ratio.

Debt and Equity Ratio:

Debt equity ratio is incorporated with debt and equity or shareholder’s equity used in the company. This financial ratio represents share of ‘debt’ which includes short term debt as well as long term debt and ‘equity’.

Answer 7

Chapter 2, Problem 10BTN

To determine

(a)

To identify:

Company which is most profitable according to its return on assets.

Return on Total Assets Ratio:

Measurement of a company’s earnings against its net assets is known as return on total assets ratio.

Debt and Equity Ratio:

Debt equity ratio is incorporated with debt and equity or shareholder’s equity used in the company. This financial ratio represents share of ‘debt’ which includes short term debt as well as long term debt and ‘equity’.

Answer 8

To determine

(b)

To identify:

Most risky company according to the debt ratio.

Explanation:

Debt ratio of S, A and G Company is 26.1%, 58.9% and 18.4% respectively.

Higher the ratio more risky will be the company.

Here A Company has the highest ratio which shows high risk.

Thus, A Company is the most risky company according to debt ratio.

(c)

To identify:

Company deserves increased investment based on a joint analysis of return on assets and debt ratio.

Explanation:

A Company is a more risky company since it has the highest debt equity ratio as compared with S Company and G Company.

Whereas G Company has the lowest debt equity ratio as compared with A Company and S Company.

These two ratios are entirely different on the basis of which comparison is quite incomplete.

Hence, these ratios do not tell about the investment related aspects.

Answer 9

To determine

(b)

To identify:

Most risky company according to the debt ratio.

Explanation:

Debt ratio of S, A and G Company is 26.1%, 58.9% and 18.4% respectively.

Higher the ratio more risky will be the company.

Here A Company has the highest ratio which shows high risk.

Thus, A Company is the most risky company according to debt ratio.

(c)

To identify:

Company deserves increased investment based on a joint analysis of return on assets and debt ratio.

Explanation:

A Company is a more risky company since it has the highest debt equity ratio as compared with S Company and G Company.

Whereas G Company has the lowest debt equity ratio as compared with A Company and S Company.

These two ratios are entirely different on the basis of which comparison is quite incomplete.

Hence, these ratios do not tell about the investment related aspects.

Answer 10

To determine

(c)

To identify:

Company deserves increased investment based on a joint analysis of return on assets and debt ratio.

Answer 11

To determine

(c)

To identify:

Company deserves increased investment based on a joint analysis of return on assets and debt ratio.

Answer 12

Expert Solution & Answer

Answer 13

Expert Solution & Answer

Answer 14

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Answer 15

Ch. 2 - Prob. 1MCQ Ch. 2 - Prob. 2MCQ Ch. 2 - Prob. 3MCQ Ch. 2 - Prob. 4MCQ Ch. 2 - Bonaventure Company has total assets of...Ch. 2 - Provide the names of two (a) asset accounts, (b)...Ch. 2 - Prob. 2DQ Ch. 2 - Prob. 3DQ Ch. 2 - Prob. 4DQ Ch. 2 - Prob. 5DQ

(c) To identify: Company deserves increased investment based on a joint analysis of return on assets and debt ratio.

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Chapter 2 Solutions

(c)

To identify:

Company deserves increased investment based on a joint analysis of return on assets and debt ratio.