The Following Return on Investment Ratios Were Computed for Steven

question 9

Essay

The following return on investment ratios were computed for Steven Company:
$$\begin{array} { l l l l l l } & \underline{2010} & \underline{2009}& \underline{2008} &2007\\\text { Return on assets } & { 12 \% } & { 15 \% } & { 15 \% } & { 18 \% } \\\text { Return on equity } & 12 \% & 15 \% & 11 \% & 20 \%\end{array}$$ Requirements:
A.Compute financial leverage percentage for each year.
B.Explain briefly the stockholders' advantage or disadvantage for each year.

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Definitions:

Insight Learning

A form of cognitive learning where the solution to a problem suddenly becomes clear without trial-and-error, often through understanding the underlying structure of the problem.

Observational Learning

A learning process through watching the behaviors of others and then imitating or modeling those behaviors.

Retention

The ability to maintain or keep information in the mind, or the act of preserving something.

Encoding

The initial process of converting information into a form that can be stored in memory.