Use the information that follows taken from Campbell Company's financial statements for the years ending December 31, 2010 and 2009 to answer problems 45 through 48.

-Calculate Campbell's return on equity and return on assets for the year ended December 31, 2010. Assume that the income tax rate is 30%. Also assume that in Campbell's industry, the industry average return on equity is 19% and the average return on assets is 11%.
A) Campbell's return on equity and return on assets are better than average for Campbell's industry.
B) Campbell's return on equity and return on assets are worse than average for Campbell's industry.
C) Campbell's return on equity is better but return on assets is worse than average for Campbell's industry.
D) Campbell's return on equity is worse but return on assets is better than average for Campbell's industry.

Question

Use the information that follows taken from Campbell Company's financial statements for the years ending December 31, 2010 and 2009 to answer problems 45 through 48.
 
-Calculate Campbell's return on equity and return on assets for the year ended December 31, 2010. Assume that the income tax rate is 30%. Also assume that in Campbell's industry, the industry average return on equity is 19% and the average return on assets is 11%.
A) Campbell's return on equity and return on assets are better than average for Campbell's industry. 
B) Campbell's return on equity and return on assets are worse than average for Campbell's industry. 
C) Campbell's return on equity is better but return on assets is worse than average for Campbell's industry. 
D) Campbell's return on equity is worse but return on assets is better than average for Campbell's industry.

Quizplus · Accepted Answer

Because net income is negative, both of these ratios are less than zero and both ratios are worse than the industry average.

Use the Information That Follows Taken from Campbell Company's Financial