Question 1

One important difference between return on assets (ROA)  and return on common shareholder's equity (ROCE)  is that:

Accepted Answer

A)   ROA does not differentiate based on how a company finances its assets; ROCE does.
B)   ROA does not distinguish between the different types of income items, such as income from continuing operations, discontinued operations, extraordinary items and changes in accounting principles; ROCE does.
C)   ROCE does not distinguish between the different types of income items, such as income from continuing operations, discontinued operations, extraordinary items and changes in accounting principles; ROA does.
D)   ROCE does not differentiate based on how a company finances its assets; ROA does.

Question 2

Discuss the economic characteristics of firms that have the following mix of profit margin and asset turnover. In addition provide an example of an industry that would have the relevant profit margin asset turnover mix:
High profit margin and low asset turnover.
Low profit margin and high asset turnover

Accepted Answer

1. Firms and industries characterized by...

Question 3

Refer to the information for Orca Industries . Orca's asset turnover is:

Accepted Answer

A)   1.31
B)   1
C)   1.58
D)   1.44

Question 4

Refer to the information for Ramos Company. In a percentage change income statement over the period of 2009 to 2011, what is the change in net income?

Accepted Answer

A)   100%
B)   21.6%
C)   72.4%
D)   27.6%

Question 5

When an analyst uses measures of past profitability to forecast the firm's future profitability the expectation is that those revenues, gains, expenses and losses will ____________________.

Accepted Answer

The answer of When an analyst uses measures of past...

Question 6

Economic theory suggests that higher levels of ____________________ in any activity should lead to higher levels of ___________________________________.

Accepted Answer

risk, expe...

Exam 4: Profitability Analysis

Refer to the information for Orca Industries . Orca's asset turnover is:

Correct Answer
verified

When an analyst uses measures of past profitability to forecast the firm's future profitability the expectation is that those revenues, gains, expenses and losses will ____________________.

Correct Answer
verified

One important difference between return on assets (ROA) and return on common shareholder's equity (ROCE) is that:

Correct Answer
verified

Refer to the information for Ramos Company. In a percentage change income statement over the period of 2009 to 2011, what is the change in net income?

Correct Answer
verified

Economic theory suggests that higher levels of in any activity should lead to higher levels of _______________.

Correct Answer
verified
risk, expe...
View Answer

Correct Answer
verified
1. Firms and industries characterized by...
View Answer

Exam 4: Profitability Analysis

Refer to the information for Orca Industries . Orca's asset turnover is:

Correct AnswerverifiedShow Answer

When an analyst uses measures of past profitability to forecast the firm's future profitability the expectation is that those revenues, gains, expenses and losses will ____________________.

Correct AnswerverifiedShow Answer

One important difference between return on assets (ROA) and return on common shareholder's equity (ROCE) is that:

Correct AnswerverifiedShow Answer

Refer to the information for Ramos Company. In a percentage change income statement over the period of 2009 to 2011, what is the change in net income?

Correct AnswerverifiedShow Answer

Economic theory suggests that higher levels of ____________________ in any activity should lead to higher levels of ___________________________________.

Correct Answerverifiedrisk, expe...View AnswerShow Answer

Correct Answerverified1. Firms and industries characterized by...View AnswerShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Economic theory suggests that higher levels of in any activity should lead to higher levels of _______________.

Correct Answer
verified
risk, expe...
View Answer

Correct Answer
verified
1. Firms and industries characterized by...
View Answer