a. Why is the rate earned on stockholders equity by a thriving business ordinarily higher than the
Question:
a. Why is the rate earned on stockholders’ equity by a thriving business ordinarily higher than the rate earned on total assets?
b. Should the rate earned on common stockholders’ equity normally be higher or lower than the rate earned on total stockholders’ equity? Briefly explain.
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Answer rating: 91% (12 reviews)
a Due to leverage the rate on stockholders equity will often ...View the full answer
Answered By
Patrick Busaka
I am a result oriented and motivated person with passion for challenges because they provide me an opportunity to grow professionally.
5.00+
38+ Reviews
58+ Question Solved
Related Book For
Financial and Managerial Accounting
ISBN: 978-0538480895
11th Edition
Authors: Jonathan E. Duchac, James M. Reeve, Carl S. Warren
Question Posted:
Students also viewed these Managerial Accounting questions
-
(a) Why is the rate earned on stockholders equity by a thriving business ordinarily higher than the rate earned on total assets? (b) Should the rate earned on common stockholders equity normally be...
-
Why is the rate used to discount FCFF different from the rate used to discount FCFE?
-
Why is the rate on commercial paper usually less than the prime rate charged by bankers and more than the Treasury bill rate?
-
Data for Sabanci Holding can be found in the table below. Theincome statement items correspond to revenues or costs during theyear ending in either 2018 or 2019. The balance sheet itemscorrespond t 2...
-
Jared Company had beginning inventory of $40,000; net sales of $275,000; and cost of goods purchased of $160,000. In the previous year, the company had a gross profit margin of 45%. Calculate the...
-
HearSmart manufactures headphone cases. During September 2014, the company produced and sold 107,000 cases and recorded the following cost data: Requirements 1. Compute the cost and efficiency...
-
Gulf Coast Corporation is a successful oil and gas exploration business in the southwestern United States. At the beginning of 20xx, the company made investments in three companies that perform...
-
Stanton Company is planning to produce 2,000 units of product in 2012. Each unit requires 3 pounds of materials at $6 per pound and a half-hour of labor at $14 per hour. The overhead rate is 70% of...
-
Information from the financial statements of Ames Fabricators, Inc., included the following: Ames's net income for the year ended December 3 1 , 2 0 2 4 , is $ 5 0 0 , 0 0 0 . The income tax rate is...
-
This exercise is a continuation of E5-13. Proud Corporation acquired 80 percent of Stergis Companys voting stock on January 1, 20X3, at underlying book value. The fair value of the noncontrolling...
-
a. How does the rate earned on total assets differ from the rate earned on stockholders equity? b. Which ratio is normally higher? Explain.
-
Describe two reports provided by independent auditors in the annual report to shareholders.
-
Refer to Problem 10.13. a) If the allowance factor is 15%, what is the standard time for this operation? b) If the allowance factor is 18% and the performance rating is now 90%, what is the standard...
-
Cadott Manufacturing produces three products. Production and cost information show the following: Model X Model Y Model Z Units produced 1,000 3,000 6,000 Direct labor hours 2,000 1,000 2,000 Number...
-
What Agile Operations Factors (Visibility, Flexibility, Speed, Predictability, And Scalability) do you consider for apple inc iPhone 13
-
Black Oak Company makes and sells oak boxes for a price of $60 each. Unit costs based on anticipated monthly sales of 1,000 boxes are as follows: Direct material cost $15 Direct labor cost 12...
-
How do economic factors such as inflation rates and GDP growth affect consumer spending behavior in our industry? What regulatory changes or government policies could impact our market, and how...
-
Operating cash flow. Grady Precision Measurement Tools has forecasted the following sales and costs for a new GPS system: annual sales of 40,000 units at $26 a unit, production costs at 37% of sales...
-
A tort is a civil wrong that is committed against a person or property for which a court provides a remedy in the form of an action for damages.
-
Privitera and Freeman (2012) constructed a scale to measure or estimate the daily fat intake of participants; the scale was called the estimated daily intake scale for fat (EDIS-F). To validate the...
-
Computer forensics is a rapidly expanding field with new software packages appearing all the time. Beyond the two largest players right now, search the Internet to find an open source or proprietary...
-
What types of accounts are referred to as temporary accounts?
-
What is the purpose of the post-closing trial balance?
-
What is the natural business year?
-
Job Costing at Boeing Values: Direct Materials Cost: $500,000 Direct Labor Cost: $300,000 Manufacturing Overhead: $200,000 Requirements: Calculate the total manufacturing cost for Boeing's project....
-
The following information is available for ABC Company for the year ended December 31, 2023: Item Amount ($) Sales Revenue 13,500,000 Cost of Goods Sold 6,750,000 Gross Profit ? Operating Expenses...
-
Wendell's Donut Shoppe is investigating the purchase of a new $ 3 7 , 7 0 0 donut - making machine. The new machine would permit the company to reduce the amount of part - time help needed, at a cost...
Study smarter with the SolutionInn App