Compute violet corporation return on assets

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Reference no: EM132204945

Question - The following data were extracted from the records of Violet Corporation:

Profit P200,000

Interest expense 24,000

Preference dividend 20,000

Beginning assets 900,000

Ending assets 1,100,000

Beginning ordinary equity 580,000

Ending ordinary equity 620,000

Required:

A. Compute Violet corporation's return on assets.

B. Compute Violet corporation's return on ordinary equity.

C. Is the financial leverage favourable or unfavourable? Explain.

Reference no: EM132204945

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