Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Revenues increased by 30% in your firm during the past year while total assets increased only 5% and equity financing ratios remained constant at 50%.

Revenues increased by 30% in your firm during the past year while total assets increased only 5% and equity financing ratios remained constant at 50%. Return on equity remained constant at 12%. Why didn't return on equity increase?

a) Total margins dropped

b) Total asset turnover dropped

c) Total asset turnovers and total margins dropped

d) None of these are correct

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Activity Accounting An Activity-Based Costing Approach

Authors: James A. Brimson

1st Edition

0471196282, 978-0471196280

More Books

Students also viewed these Accounting questions