Question

Use the following information to answer the next 3 questions.

JJ Inc. has (net income / sales )= .20, (sales / assets)= 1, and (assets / equity)= 1.5

CC Inc. has (net income / sales )= .11, (sales / assets)= 2.3, and (assets / equity)= 1.5

SS Inc. has (net income / sales )= .20, (sales / assets)= 2, and (assets / equity)= 1

RC Inc. has (net income / sales )= .05, (sales / assets)= 1, and (assets / equity)= 8

23)   What is the Return on Assets (ROA) for CC Inc.?

A. 2.300

B. 1.500

C. .253

D. .375

E. there is not enough information to answer the question

24) What is the Return on Equity (ROE)for JJ Inc.?

A. .20

B. .375

C. .30

D. 2.0

E. there is not enough information to answer the question

25) If you were an individual investor, which company would you invest in?

NOTE: Remember from class that we said there is a positive relationship between risk and return. (In other words, you want to be compensated for any risk that you take.)

A. JJ INC.

B. CC INC.

C. SS INC

D. RC INC

E. you are indifferent between SS INC. and RC INC. since they have the same return on equity (ROE)

Answer 1

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE