Question: Let's see if we can understand this concept a bit more. Rocky Corporation has the following information for the current year: Total and average assets

Let's see if we can understand this concept a bit more.

Rocky Corporation has the following information for the current year:

Total and average assets $3 million Total and average equity: $2 million Net income: $500,000

Calculate the return on assets. Calculate the return on equity. Show your calculations.

Riley Corporation has the following information for the current year:

Total and average assets $3 million Riley corporation has no debt and has had no debt all year. Net income: $500,000

Calculate the return on assets. Calculate the return on equity. Show your calculations.

Next, calculate the same information for Rocky and Riley but this time let's assume both companies lost $250,00 for the year. Show your calculations.

Offer your thoughts on what the relationship is between ROA and ROE.

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