All categories

3 years ago

ABC Company's return on asset is greater than XYZ Company's return on asset, but XYZ

Business

1 answer:

fomenos3 years ago

4 0

Answer:

d) XYZ company is highly debt financed relative to ABC

Explanation:

The difference between the return on equity ( ROE) and return on assets (ROA) is the structure of capital financing.

ROE is calculated as follows

ROE = net income / shareholders equity. Shareholders' equity is the difference between a business's assets and liabilities. I.e., shareholders equity = Assets - Liabilities.

ROE considers the debts of the business. If a company is highly indebted, its ROE will be high.

ROA is calculated: ROA = net income/ total assets. Total assets is the sum of shareholders' equity plus liabilities. i.e., total assets = assets + liabilities.

The difference is the two ratios is the denominator. If the denominator is small, the ratio will be bigger. A business with a high level of debt will have reduced equity( assets- liabilities).

XYZ Company's return on equity is greater than ABC's, implying that XYZ has more debts than ABC.

You might be interested in

13.. Francisco leased equipment from Julio on December 31, 2021. The lease is a 10-year lease with annual payments of $150,000 d

tatuchka [14]

Answer:

$800,239.40

Explanation:

Calculation for the balance in Francisco lease liability at December 31, 2022

First step is to find the Liability for the year end 31st December 2021

Using this formula

Liability as on 31st December 2021=Initial Value of the Liability - Annual Payment

Let plug in the formula

31st December 2021 Liability =$1,013,854-$150,000

Liability as of 31st December 2021=$863,854

Second step is to find Interest for the Year 2022

Interest =$863,854×10%

Interest =$86,385.40

Third step is to less the interest amount from the Annual payment

Annual Payment $150,000- Interest $86,385.40

=$63,614.60

Last step is to find the balance in the lease liability at December 31, 2022

Lease liability balance = $863,854 -$63,614.60

Lease liability balance=$800,239.40

Therefore What should be the balance in Francisco lease liability at December 31, 2022 will be $800,239.40

5 0

3 years ago

Identify the major transportation improvements in this period, and explain how they influenced the market economy.

kramer

In the first half of the nineteenth century, the steamboat, canal, railroad and telegraph were presented. This made transportation a great deal less expensive and quicker for organizations. It additionally connected agriculturists to national markets. The railroad gave employments to such huge numbers of Americans, despite the fact that many were foreigners. Telegraph made it conceivable to impart cross country, in any event quicker than mail would. It was for the most part utilized for organizations. Each of the four of these innovations twisted America out of its monetary past by making exchange/business speedier, less expensive, and more productive.

7 0

3 years ago

Benchmarking involvesA. comparing how different companies perform various value chain activities and then making cross-company c

Vinvika [58]

Answer:

Letter A is correct. <u>Comparing how different companies perform various value chain activities and then making cross-company comparisons of the costs of these activities.</u>

Explanation:

The most suitable alternative to this question is letter A, because the definition Benchmarking can be defined <u>as the process and search for in-depth knowledge about your competitors and the way they carry out their activities. </u>

It consists of investigating competitors in order to compare operations, products and services between a company and its main competitors. Through the research of competitors it is possible to better understand the market and adapt the best practices to be successful, in addition to achieving continuous improvement of processes, in addition to reducing errors and costs through the analysis and knowledge of the actions of competing companies.

3 0

3 years ago

How will the general ledger accounts in the trial balance most likely differ if the company were a retail store rather than a wh

ExtremeBDS [4]

How will the general ledger accounts in the trial balance most likely differ if the company were a retail store rather than a wholesale company?

A general ledger account is used to record transactions that a company has. A trial balance has all of the general ledger accounts listed shows all of the debits and credits that a company has faced. A retail store will have smaller product transactions over a wholesale store due to the wholesale store selling in bulk. There will likely be more credits and debits for a retail store whereas a wholesale store may have more debits as they are less likely to have returns.

How will they differ for a hospital or a government unit?

A hospital or government unit will have vastly different general ledger reports due to the type of agency they are. These transactions will deal more with insurance or big dollar companies rather than individuals on a smaller scale. A trial balance is not a financial statement but it used to show balances that an organization has.

7 0

3 years ago

Mark, a newspaper editor, walks into the newsroom and announces to a group of five reporters: "I'll pay a $2,000 bonus to the fi

lions [1.4K]

Answer: Unilateral contract

Explanation: A Unilateral contract is a form of contract where a promise is made by one party to another, this contract is normally on a condition that the receiver of the promise in the contract would complete some task(s), in order to receive the promise.

Mark made a promise to his staffs in the newspaper newsroom to be fulfilled, if the task was accomplished by anyone. Of which Anna completed the task and claimed the promise by the editor.

3 0

4 years ago