Question:
Front Beam Lighting Company has the following ratios compared to its industry for 2010.
|
Front Beam Lighting
|
Industry |
| Return on assets |
12%
|
5%
|
Return on equity
|
16%
|
20%
|
Explain why the return-on-equity ratio is so much less favorable than the return-on-assets ratio compared to the industry. No numbers are necessary; a one-sentence answer is all that is required.