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Suppose Firm A and Firm B have a debt/(Total Assets) ratio of 20% and 80%, respectively, and return on equity (ROE) of 10% and 30%,
Suppose Firm A and Firm B have a debt/(Total Assets) ratio of 20% and 80%, respectively, and return on equity (ROE) of 10% and 30%, respectively. 1)-- Which firm has a higher profitability of assets, measured by return on assets (ROA) 2)-- Is Firm B better than Firm A, or vice versa? (give a very specific reason for your choice.)
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