Essential difference between roa and roe profit measures

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Reference no: EM133036920

Question 1: In this chapter we identified two kinds of ratios: percentages and rates. Please distinguish between rates and percentages.

Question 2: Explain why financial statement data is made more useful by forming SPELL ratios?

Question 3: Describe the kinds of questions related to the firm's financial strengths and weaknesses each of the SPELL ratios can help answer.

Question 4: Explain why a firm might be reluctant to meet its short-term liquidity needs by liquidating long-term assets.

Question 5: What is the essential difference between ROA and ROE profit measures? What do they each measure?

Question 6: What conditions guarantee that ROE > ROA or that ROA & ROE?

Question 7: Explain the connections between efficiency and ROE or ROA measures.

Question 8: Explain why it is difficult to compare net working capital numbers between firms.

Question 9: Compare firms with low ITO ratios such as jewelry stores with firms with high ITO ratios like grocery stores or gas stations. How might their profit margin requirements for success differ? Explain.

Reference no: EM133036920

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