Wolastoq Corp. reported the following ratios for 2018 and 2017: __________________________________________________2018.....................2017 Return on common shareholders' equity.............17.4%...................19.1% Return
Question:
Wolastoq Corp. reported the following ratios for 2018 and 2017:
__________________________________________________2018.....................2017
Return on common shareholders' equity.............17.4%...................19.1%
Return on assets..................................................10.8%.....................9.2%
Debt to total assets..............................................38.0%...................52.0%
Profit margin.........................................................9.8%......................6.1%
Asset turnover.................................................1.1 times...............1.5 times
(a) What changes in the ratios above may have increased or decreased the company's return on assets in 2018?
(b) What is the key reason driving the change in Wolastoq's return on common shareholders' equity in 2018? Explain.
Step by Step Answer:
a Return on assets is driven by profit margin and asset turnover The in...View the full answer
Financial Accounting Tools for Business Decision Making
ISBN: 978-1119368458
7th Canadian edition
Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso, Barbara Trenholm, Wayne Irvine
