When a company's ROE is greater than its ROA in a given time period, it could be that:
A)the company was able to borrow at an after tax rate that was less than the rate earned by investing in assets.
B)the company was able to borrow at an after tax rate that was higher than the rate earned by investing in assets.
C)the company has no debt.
D)the level of debt has no impact on the ROA

Question

Quizplus · Accepted Answer

If a company's ROE is greater than its ROA, it means the company is generating more profit per dollar of shareholder's equity than per dollar of assets. This could indicate that the company was able to borrow at a lower after-tax rate than the rate earned by investing in assets, which can increase the return on equity.

When a Company's ROE Is Greater Than Its ROA in a Given