The only difference between Joe's and Moe's is that Joe's has old,fully depreciated equipment.Moe's just purchased all new equipment that will be depreciated over 8 years.Assuming all else equal,
A)Joe's will have a lower profit margin.
B)Joe's will have a lower return on equity.
C)Moe's will have a higher net income.
D)Moe's will have a lower profit margin.
E)Moe's will have a higher return on assets.

Question

Quizplus · Accepted Answer

Joe's will have lower expenses due to having fully depreciated equipment, therefore they will have a higher profit margin than Moe's. Moe's, on the other hand, will have higher expenses due to the depreciation of their new equipment, resulting in a lower profit margin.

The Only Difference Between Joe's and Moe's Is That Joe's