Paw Locker has the highest Return on Assets in its comparison group. Which of the following could be a secret to its success? (select all that apply)
(Hint: look carefully at the definition of ROA to find only the items that will affect the ratio)
Company
Return on Equity
Return on Assets
Financial Leverage
Return on Sales
Asset Turnover
Dog Nation
0.177
0.060
3.740
0.026
2.338
Dog Shoe Warehouse
0.178
0.119
1.501
0.065
1.828
Hound Smart
0.177
0.112
1.762
0.03
2.930
Paw Locker
0.177
0.126
1.430
0.065
1.927
Pooch Mart
0.177
0.111
1.639
0.057
1.938
a. Able to charge a higher price than Pooch Mart
b. Holds lower inventory levels than Dog Shoe Warehouse
c. Uses more equity financing than Dog Nation
d. Pays less interest expense than Pooch Mart
e. Uses less debt financing than Hound Smart

The ratio analysis is the analytical tool that helps in measuring the difference or the relation between two different variables of two same or different financial statements. It helps in taking business and investment decisions by the managers and helps investors for better comparison.

The secret to the success of Paw Locker may include:

c. Uses more equity financing than Dog Nation  

d. Pays less interest expense than Pooch Mart  

e. Uses less debt financing than Hound Smart

The ROA measures the capability of the business to earn profits from the total assets held. The ROA of the company or the business helps the managers, investors, or analysts to get an idea about the efficiency of the assets of the company.

In the given case the ROA of Law Lockers is 12.6%. When it is compared to other companies the ROA of Paw Lockers is higher. This shows that the company is efficiently using its assets to generate revenues.

To know more about ratio analysis, refer to the link:

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Paw Locker

The secret to its success include:

c. Uses more equity financing than Dog Nation

d. Pays less interest expense than Pooch Mart

e. Uses less debt financing than Hound Smart

Explanation:

a) Data and Calculations:

                           Company   Dog Shoe    Hound    Paw       Pooch

                                            Warehouse    Smart     Locker    Mart

Return on Equity      0.177        0.178          0.177       0.177         0.177

Return on Assets     0.060      0.119           0.112       0.126        0.111

Financial Leverage  3.740       1.501           1.762       1.430         1.639

Return on Sales       0.026      0.065          0.03       0.065       0.057

Asset Turnover        2.338      1.828           2.93         1.927         1.938

b) Paw Locker's Return on assets (ROA) indicates how profitable it is relative to its total assets.  Its ROA gives a manager, investor, or analyst an idea as to how efficient the Paw Locker's management is at using the company's assets to generate earnings.  As a percentage, Paw Locker's Return on assets is 12.6% and is better than the other companies' ROAs.

answer; i believe the correct answer is (sales promotion;

answer; tech (a) is correct;