Fundamental Accounting Principles
Fundamental Accounting Principles
23rd Edition
ISBN: 9781259536359
Author: John J Wild, Ken Shaw Accounting Professor, Barbara Chiappetta Fundamental Accounting Principles
Publisher: McGraw-Hill Education
Question
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Chapter 2, Problem 10BTN
To determine

Concept Introduction:

• Debt Ratio is the ratio of total debts and total assets. It measures the extent of company’s leverage. It indicates the percentage of company’s assets that are financed by debt. The company having high debt ratio has high financial risk.

• Return on Assets is the ratio between net income and average assets. It is the indicator of efficient use of the assets of the company. It tells us the earning generated from capital invested in the assets.

Requirement – 1

To determine: Most profitable company according to Return to Assets

To determine

Requirement – 2

To determine:Most risky according to Debt Ratio

To determine

Requirement – 3

To determine:The need of increased investment

Blurred answer

Chapter 2 Solutions

Fundamental Accounting Principles

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