You are studying with some classmates and are reviewing your class notes. One of your classmates makes

Question:

You are studying with some classmates and are reviewing your class notes. One of your classmates makes the following comment:

“I’m trying to understand what the trend in return on assets means. If a company shows an increasing return on assets, that’s a positive trend, isn’t it? In our homework question, Company A had a larger increase in return on assets than Company B. Company A had decreasing assets and stable net income. Company B had increasing assets and increasing net income, but this showed a much smaller increase in return on assets than Company A. My analysis showed that Company A had the better position because it had a larger return on assets. Why did I not receive full marks? I don’t understand what else there is to say about these two companies.”


Required

Identify how your classmate’s answer could be substantively improved.

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Understanding Financial Accounting

ISBN: 9781119406921

2nd Canadian Edition

Authors: Christopher D. Burnley

Question Posted: