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FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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
Transcribed Image Text:QUESTION:
CATHERINE'S CONSULTING HAS NET INCOME
OF $4,400 AND TOTAL EQUITY OF $39,450. THE
DEBT-EQUITY RATIO IS 1 AND THE PLOWBACK
RATIO IS 40 PERCENT. WHAT IS THE RETURN
ON ASSETS?
QUESTION:
AL'S MARKETS EARNS $0.12 IN PROFIT FOR
EVERY $1 OF EQUITY AND BORROWS $0.65 FOR
EVERY $1 OF EQUITY. WHAT IS THE FIRM'S
RETURN ON ASSETS?
A) 12.00 PERCENT
B) 7.27 PERCENT
C) 8.33 PERCENT
D) 15.15 PERCENT
E) 13.75 PERCENT
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