Indicate the Effect of the Following Transactions On

question 36

Essay

Indicate the effect of the following transactions on:
i.Return on net operating Assets (RNOA)
ii. Return on common stockholders equity (ROCE)
iii. Earnings per share (basic)
Consider each transaction independently and explain your answer. Assume that ROCE is higher than RNOA.
Company issues more preferred stock and uses proceeds to reduce accounts payable
Company has a stock split
Company converts to just-in-time inventory system (JIT). This allows them to hold half the levels of inventory for the same amount of sales (sales themselves are not increased by this change to JIT).

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Definitions:

Public Policy

The principles, often unwritten, on which social laws are based, determined by governmental entities and officials to address public issues.

Information Technology

The study or use of systems (especially computers and telecommunications) for storing, retrieving, and sending information.

Unemployment Insurance

A government program that provides financial assistance to unemployed workers who have lost their jobs through no fault of their own.

Frictional Unemployment

Frictional unemployment occurs when there is a temporary mismatch between workers and jobs, such as when individuals are transitioning between jobs or entering the workforce for the first time.