Explore BrainMass
Share

Is the executive correct in predicting that ROE will fall?

This content was STOLEN from BrainMass.com - View the original, and get the already-completed solution here!

Which company would you expect to have the higher debt to equity ratio, a financial institution or a high technology company? Why?

Which company would you expect to have a higher profit margin, an appliance manufacturer or a grocer? Why?

Which company would you expect to have a higher price to earnings ratio, General Motors or Google? Why?

Which company would you expect to have a higher current ratio, a jewelry store or an online bookstore? Wny?

Your firm is considering the acquisition of a very promising technology company. One executive argues against the move, pointing out that because the technology company is presently losing money, the acquisition will cause your firm's return on equity to fall.

Is the executive correct in predicting that ROE will fall?
How important should changes in ROE be in this decision?

Response is 617 words of original commentary.

© BrainMass Inc. brainmass.com October 25, 2018, 4:04 am ad1c9bdddf
https://brainmass.com/business/return-on-equity/is-the-executive-correct-in-predicting-that-roe-will-fall-365674

Solution Summary

Discussion is about capital structure for different businesses. Response is 617 words of original commentary.

$2.19
See Also This Related BrainMass Solution

Calculating ROE Using DuPont Method for Yahoo and Google

Using the annual report information available on each of the company's websites: compute the ROE for Yahoo and Google.

Please use the DuPont Method =(Net Profit Margin) x (Asset Turnover) x (Equity Multiplier) for Year End 2010 for each company.

Please show calculations.

View Full Posting Details