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BARSIC [14]
3 years ago
6

This year Erie achieved an ROE of 23.9%. Suppose the Board of Directors of Erie mandates that management take measures to increa

se financial Leverage (Assets/Equity) next year from 2.6 to 3.2. Assuming Sales, Profits, and Assets remain the same next year, what effect would you expect this new Leverage policy will have on Erie ROE? (Hint- use the DuPont formula)"a. Erie s ROE will decrease.b. Erie s ROE will increase.c. Erie s ROE will remain the same.d. Erie s equity will decrease and the stock price will increase
Business
1 answer:
allochka39001 [22]3 years ago
8 0

Answer:

c. Erie s ROE will remain the same

Explanation:

As the return on asset is calcualte using the asset figure it will not change with a financial leverage measurement.

As the financial leverage acts in the composition of other side of the accounting (assets = liabilitis + equity) it will change the return on equity, the debt ratio and other metric related to this side but, not the return on assets.

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3 years ago
Which of the following statements is true of a trial​ balance?A.A trial balance has the same format as a balance sheet.B.A trial
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Answer:

A trial balance presents data in debit and credit format.

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3 years ago
You just won the Powerball and are offered two payment options: 1) Receiving $80 million per year for 25 years beginning at next
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Answer: $80 million per year for 25 years

Explanation:

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3 years ago
If Shawn can produce donuts at a lower opportunity cost than Sue, then ____
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Answer:

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Shawn renounce to less goods than Sue when producing donuts.

This meas, Shawn has a comparative advantage in the production of donuts as their cost from the economic point of view are lower.

This do not imply that Sue cannot outproduce Shawn, it means it cost her more than Shawn

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