The effect on accounting equation is that total liabilities would decrease and stockholder's equity would increase.
<h3>What is the accounting equation?</h3>
The accounting equation also known as the balance sheet equation relates the assets of a business to its liabilities and stockholders' equity. According to the accounting equation: Stockholders' equity = Assets - liabilities.
When a liability reduces, stockholder's equity increases. Also, when assets increases, stockholder's equity increases.
To learn more about stockholder’s equity, please check: brainly.com/question/26210654
Networking is the exchange of information and ideas among people with a common profession or special interest, usually in an informal social setting. It is used by professionals to expand their circles of acquaintances, to find out about job opportunities in their fields, and to increase their awareness of news and trends in their fields or in the greater world.
Answer:
ROE = 16.98%
Explanation:
The question is to determine Amer Company's Return on Equity
The following steps are taken:
1) The Total Debt ÷ Total Assets = 35%
It means Total Debt ÷ 1000= 0.35
Meaning 0.35 x $1,000 = $350 and this is the total debt
2) Calculate Interest on debt
Interest on debt = Interest rate on total debt x total debt
= 4.57% x $350 = $16
3) Now calculate the Net Income from Earnings before Interest and Tax
Earnings before Interest and tax = $200
less interest $16
Earnings Before Tax $184
Subtract tax (40% of EBT) $73.6
Net income $110.4
4) Calculate the Return on Equity
= Net income/ Shareholders' Equity
= $110.4/ ($1,000-$300)
= 16.98%
Answer:
A. 1.59%
Explanation:
Return on equity is a measure of profitability of a company in relation to the equity which is assets less liabilities.
Using Du Point analysis,
ROE = Net profit margin × Asset Turnover × Equity multiplier.
Therefore,
ROE of A = 2.2 × 1.7 × 5.0
= 18.7%
For ROE of B to match A
Asset turn over of B = ROE of A / profit margin of B × equity multiplier of B.
NOTE:
This was gotten from from equating ROE of A to ROE of B and making asset turn over of B subject of the formula.
Therefore,
Given that,
ROE of A = 18.7%
Profit margin of B = 2.5%
Equity multiplier of B = 4.7
We then have,
Asset turnover of B = 18.7 ÷ ( 2.5 × 4.7)
= 18.7 ÷ 11.75
=1.59 %
Therefore B needs 1.59% asset turn over to match manufacturers A ROE
Answer:
The correct answer will be Option b (unintended changes in tax liabilities).
Explanation:
- Government should minimize the inevitable increases in tax liabilities, besides obvious reasons adjusted for inflation, earnings will increase, but mostly individuals will indeed be healthier and more productive income level and might have to pay more in taxes.
- The objective is to reduce this, thereby directly increasing the chances of inflation or unemployment.
Some other alternatives offered are not in relation to the condition in question. So Choice b has been the appropriate one.
