All other things the same, if a company uses long-term debt to purchase land to develop in the future, the company's return on total assets will decrease.

Question

Quizplus · Accepted Answer

Using long-term debt increases the liabilities of the company, which decreases the return on total assets. The interest expense on the debt will also decrease the net income, further reducing the return on assets.

All Other Things the Same, If a Company Uses Long-Term