Asked by LAVISH SHUKLA on Apr 25, 2024
Verified
The extent to which a company uses its liabilities to leverage up its return to stockholders is measured by the difference between ROE and ROA.
ROE
Return on Equity, a measure of financial performance calculated by dividing net income by shareholder's equity.
ROA
Return on assets (ROA) is a financial ratio that shows the percentage of profit a company earns in relation to its overall resources.
Liabilities
Measurable obligations resulting from a past transaction; they are expected to be settled in the future by transferring assets or providing services.
- Distinguish between the uses of different financial ratios in evaluating company performance.
- Distinguish among ideas related to shifts in proportions resulting from particular fiscal maneuvers or states.
Verified Answer
Learning Objectives
- Distinguish between the uses of different financial ratios in evaluating company performance.
- Distinguish among ideas related to shifts in proportions resulting from particular fiscal maneuvers or states.
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