The return on assets will be greater than the rate of return on common stockholders' equity if the company has been successful in trading on the equity at a gain.

Question

Quizplus · Accepted Answer

The return on common stockholders' equity will be greater than the return on assets if the company successfully trades on equity at a gain, as this indicates that the company is earning more on its equity than the cost of its debt.

The Return on Assets Will Be Greater Than the Rate