Use the Information That Follows Taken from Campbell Company's Financial

question 19

Multiple Choice

Use the information that follows taken from Campbell Company's financial statements for the years ending December 31, 2010 and 2009 to answer problems 45 through 48.

-Calculate Campbell's return on equity and return on assets for the year ended December 31, 2010. Assume that the income tax rate is 30%. Also assume that in Campbell's industry, the industry average return on equity is 19% and the average return on assets is 11%.

• A) Campbell's return on equity and return on assets are better than average for Campbell's industry.
• B) Campbell's return on equity and return on assets are worse than average for Campbell's industry.
• C) Campbell's return on equity is better but return on assets is worse than average for Campbell's industry.
• D) Campbell's return on equity is worse but return on assets is better than average for Campbell's industry.

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Definitions:

Financing Activities

Transactions that result in changes in the size and composition of the equity capital or borrowings of the entity, as reported in a company’s cash flow statement.

Non-current Liability

Liabilities that are not due within the next twelve months, such as long-term loans, bonds payable, and deferred tax liabilities.

Short-term Loans

Loans scheduled to be repaid in less than a year, typically used for immediate cash flow needs or small-scale expenses.

Cash Flows

Cash flows refer to the inflows and outflows of cash and cash equivalents, representing the operating, investing, and financing activities of an entity during a specific period.