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Alberta Inc. has sales of $1,000,000, operating profit of $50,000, interest expense of $12,500, tax expense of $7,500, total equity of $200,000, and total debt
Alberta Inc. has sales of $1,000,000, operating profit of $50,000, interest expense of $12,500, tax expense of $7,500, total equity of $200,000, and total debt of $300,000. Which of the following statements is true? Alberta Inc.'s ROE is higher than its ROA because of leverage. Alberta Inc.'s ROE is lower than its ROA because of leverage. Alberta Inc.'s ROE is the same as its ROA. There is insufficient information to determine Alberta Inc.'s ROA is higher or its ROE is higher. None of the above
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