Question: Why is return on equity commonly used along with net income to evaluate a companys performance? Assume that a company issued long-term bonds during a
Why is return on equity commonly used along with net income to evaluate a company’s performance? Assume that a company issued long-term bonds during a fiscal period, increasing its interest expense. The bonds were used to finance new plant assets. What effect would the financing and asset acquisition have on the company’s financial leverage? What effect should the additional financing have on the company’s risk and return?
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Return on equity expresses a companys earnings relative to its stockholders equity Therefore the per... View full answer
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