Question

If a company is profitable and is effectively using leverage, which one of the following ratios is likely to be the largest? Return on total assets. Return on total liabilities. Return on common stockholders' equity. Cannot be determined.

          If a company is profitable and is effectively using leverage, which
one of the following ratios is likely to be the largest?
Return on total assets.
Return on total liabilities.
Return on common stockholders' equity.
Cannot be determined.

If a company is profitable and is effectively using leverage, which
one of the following ratios is likely to be the largest?
Return on total assets.
Return on total liabilities.
Return on common stockholders' equity.
Cannot be determined.

Added by Amy A.

Horngren’s Cost Accounting

Srikant M. Datar, Madhav V. Rajan 16th Edition

Instant Answer

Solved by Expert Syed Vasi

Step 1

- Return on Total Liabilities isn't a commonly used financial ratio, but if considered, it would indicate how effectively a company uses its liabilities (debt) to generate profit. However, this is not a standard financial metric. - Return on Common Stockholders' Show more…

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If a company is profitable and is effectively using leverage, which one of the following ratios is likely to be the largest? Return on total assets Return on total liabilities Return on common stockholders' equity Cannot be determined.