(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’.

Question

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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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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.