Question
In 2012 and 2013, Inverness reduced debt by $500,000; $200,000 in 2012 and $300,000 in 2013. What would Invernesss ROE in 2012 and 2013 have
In 2012 and 2013, Inverness reduced debt by $500,000; $200,000 in 2012 and $300,000 in 2013.
What would Invernesss ROE in 2012 and 2013 have been had the company paid used this cash to pay dividends to shareholders rather than reduce debt?
Assume: Interest expense in 2012 would be increased by $15,000 and interest expense in 2013 would be increased by $35,000
Assume: no change in total assets
Under which of the two scenarios would shareholders have been better off? Why?
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Management Accounting And Control Systems An Organizational And Sociological Approach
Authors: Norman B. Macintosh, Paolo Quattrone
2nd Edition
0470714476, 978-0470714478
