2769 roe gives us profits as a percentage of

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Unformatted text preview: financing and investing. ROE tells us what rate the company is earning on the amounts the owners have invested in the company plus the amounts the owners have left in the business from prior earnings. A rate of 26.41% is probably very good, unless the investors think this company is a very risky venture, in which case they would want to be compensated a a higher annual rate. The company currently has $1.57 in current assets for each $1.00 that it owes in current liabilities. The company might have trouble meeting its current obligations since it will have to collect most of its Accounts Receivable within the next month in order to be able to pay the amounts it owes that are due within the next month. The current ratio is probably too low for this company....
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