In 20X2, C Co's Return on Owners' Equity (ROE) Was

question 126

Multiple Choice

In 20X2, C Co's return on owners' equity (ROE) was 45.1%, and return on assets (ROA) was 19.6%. In 20X2, P Co's return on owners' equity (ROE) was 29.9% while return on assets was 9.3%. Which of the following statements is false?

• A) P Co's return on assets (ROA) was less than half of C Co's ROA.
• B) P Co's ROE was 222% greater than their ROA while C Co's ROE was only 130% greater than their ROA. This difference is caused by P Co's higher use of debt financing to leverage their assets.
• C) C Co provided higher positive financial leverage for their shareholders compared to P Co.
• D) C Co. is considerably more liquid than P Co.

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Definitions:

Political Control

The mechanisms, processes, and strategies through which a government or political entity maintains its influence and authority over its jurisdiction.

Vertical Mosaic

A concept describing societies that are stratified not only by socioeconomic status but also by ethnicity, with different ethnic groups occupying different positions in the social hierarchy.

Ethnic Hierarchy

A system of social stratification based on ethnicity, where different ethnic groups are ranked in a hierarchy above or below each other on the basis of assumed superiority or inferiority.

Racial Stratification

The hierarchical organization of society based on racial or ethnic groupings that often results in unequal access to resources, opportunities, and rights.