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The following question relates to PQR, which has the following ratios: return on assets, (ROA) 10 per cent; return on equity (ROE) 12 per cent;
The following question relates to PQR, which has the following ratios: return on assets, (ROA) 10 per cent; return on equity (ROE) 12 per cent; and current ratio (CR) of 1.8:1. Directors decided to revalue land upwards by $350 000. This transaction will:
| A. | increase ROA and ROE. |
| B. | decrease ROA and ROE. |
| C. | decrease ROA, but have no effect on ROE. |
| D. | have no effect. |
Please specify the reason thanks.
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