Solved

Assume an Investor Company Is Using the Equity Method to Record

Question 44

Short Answer

Assume an investor company is using the equity method to record their investment in a wholly-owned subsidiary.What would be the effect on the ROA and Net profit margin ratios after consolidation? In the consolidated statements the:
 ROA  would be:  Net profit margin  would be:  a.  smaller  smaller  b.  smaller  no change  c.  no change  smaller  d.  no change  no change \begin{array} { | c | c | c | } \hline & \begin{array} { c } \text { ROA } \\\text { would be: }\end{array} & \begin{array} { c } \text { Net profit margin } \\\text { would be: }\end{array} \\\hline \text { a. } & \text { smaller } & \text { smaller } \\\hline \text { b. } & \text { smaller } & \text { no change } \\\hline \text { c. } & \text { no change } & \text { smaller } \\\hline \text { d. } & \text { no change } & \text { no change } \\\hline\end{array}

Correct Answer:

verifed

Verified

Unlock this answer now
Get Access to more Verified Answers free of charge

Related Questions

Unlock this Answer For Free Now!

View this answer and more for free by performing one of the following actions

qr-code

Scan the QR code to install the App and get 2 free unlocks

upload documents

Unlock quizzes for free by uploading documents