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:

Sheep Pluck

A dissected specimen consisting of the heart, lungs, and liver of a sheep, often used in biology studies.

Trachea

The main airway (windpipe) leading from the larynx to the lungs, allowing the passage of air for respiration.

Pharynx

The pharynx is a muscular tube that connects the nasal and oral cavities to the esophagus and larynx, playing a key role in the respiratory and digestive systems.

Nasal Conchae

These are long, narrow, curled shelves of bone that protrude into the nasal cavity, increasing its surface area.