Question: Identify and write out the equations for four profitability ratios. Why is the basic earning power ratio useful? Why does the use of debt lower

Identify and write out the equations for four profitability ratios. Why is the basic earning power ratio useful? Why does the use of debt lower ROA? What does ROE measure? A company has $200 billion of sales and $10 billion of net income. Its total assets are $100 billion, financed half by debt and half by common equity. What is its profit margin? (5%) What is its ROA? (10%) What is its ROE? (20%) Would ROA increase if the firm used less leverage? (Yes) Would ROE increase?

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