Return on Equity Can Be Expressed as Return on Net

question 59

True/False

Return on equity can be expressed as return on net operating assets multiplied by leverage (net operating assets/equity) and by earnings leverage.

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Definitions:

Casting

A manufacturing process where a liquid material is poured into a mold and solidifies to take on a specific shape.

Finishing

is the process of completing the final stages of manufacturing to prepare products for sale, such as painting, polishing, or packaging.

Direct Labor-Hours

The total number of work hours spent by employees who are directly involved in the manufacturing process.

Traditional Costing

An accounting method that allocates overhead costs to products based on a predetermined rate, often labor or machine hours.