Question
Division A has a higher ROE than Division B, yet Division B creates more value for shareholders and has a higher EVA than Division A.
Division A has a higher ROE than Division B, yet Division B creates more value for shareholders and has a higher EVA than Division A. Both divisions, however, have positive ROEs and EVAs. What could explain these performance measures?
Division A is riskier than Division B.
Division A is much larger (in terms of equity capital employed) than Division B.
Division A has less debt than Division B.
Statements a and b are correct.
All of the statements above are correct.
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Intermediate Financial Management
Authors: Brigham, Daves
10th Edition
978-1439051764, 1111783659, 9780324594690, 1439051763, 9781111783655, 324594690, 978-1111021573
