Charmaine Company Has a Return on Assets of 12% and a Return

question 52

Essay

Charmaine Company has a return on assets of 12% and a return on ordinary shareholders' equity of 15%. What causes the difference in the two returns?

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Definitions:

Trade Restrictions

Measures such as tariffs, quotas, and embargoes implemented by governments to control international trade and protect domestic industries.

General Agreement on Tariffs and Trade

An international trade treaty designed to boost economic recovery by reducing quotas and tariffs.

Free Trade Zones

Designated areas within a country where goods can be imported, handled, manufactured, and exported without direct intervention from customs authorities.

Mercosur

A South American trade bloc established to promote free trade and fluid movement of goods, people, and currency among its member countries.