Company XYZ took a loan in 2019, and the amount was AED 2000,000 with 5% interest,...

Transcribed Image Text:

Company XYZ took a loan in 2019, and the amount was AED 2000,000 with 5% interest, and the net income before Interent was AED 50,000 in 2020, te company too another loan, and the amount was AED 2000,000 with 10% interest, and the net income before interest was AED 800.000. Ahough the net income increased in 2020, the reum on equity (ROE) decreased compared to 2019. The number of shares has been the same for the two years. Required: As a financial analyst, you have been asked by a client to explain why the ROE decreased in 2020 though the net income increased in the same year. Explain your anw D- The following are the information on the "operating cycle" and "days accounta paynble oututanding for Company A. Company 8, and Company C - The operating cycle for Company A is 60 days, and the days accounts payable outstanding is 30. - The operating cycle for Company B is 70 days, and the days aocounts payable outstanding is 60 - The operating cycle for Company Cis 30 days, and the days acOounts payable outstanding is 30. Required: uid ornhiem? Evninin vour ansvwer Company XYZ took a loan in 2019, and the amount was AED 2000,000 with 5% interest, and the net income before Interent was AED 50,000 in 2020, te company too another loan, and the amount was AED 2000,000 with 10% interest, and the net income before interest was AED 800.000. Ahough the net income increased in 2020, the reum on equity (ROE) decreased compared to 2019. The number of shares has been the same for the two years. Required: As a financial analyst, you have been asked by a client to explain why the ROE decreased in 2020 though the net income increased in the same year. Explain your anw D- The following are the information on the "operating cycle" and "days accounta paynble oututanding for Company A. Company 8, and Company C - The operating cycle for Company A is 60 days, and the days accounts payable outstanding is 30. - The operating cycle for Company B is 70 days, and the days aocounts payable outstanding is 60 - The operating cycle for Company Cis 30 days, and the days acOounts payable outstanding is 30. Required: uid ornhiem? Evninin vour ansvwer

Answer rating: 100% (QA)

Ans3a Return on Equity is the profit that is available for the Shareholders that is the profit after ... View the full answer