Your friend says that Company A is doing a great job for shareholders. He says that...

Your friend says that Company A is doing a great job for shareholders. He says that their ROA is high. You point out that shareholders tend to like debt and the Company A has low debt. Furthermore, ROA is biased towards companies with low debt. You suggest that ____________ is a better measure of the job management is doing for shareholders.

Expert Solution

DuPont Analysis is a better measure of the job management.

DuPont Analysis = Net Income/ Sales * Sales/ Total Assets * Total Assets/ Average Shareholder Equity

jeff jeffy answered 2 years ago

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Your friend says that Company A is doing a great job for shareholders. He says that...

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