Question: 1. The return on assets for Ayala Corporation is 7.6%. During the same year, Ayala's return on common stockholders' equity is 12.8%. What is the explanation for the difference in the two rates?
2. Which two ratios do you think should be of greatest interest in each of the following cases?
(a) A pension fund considering the purchase of 20-year bonds.
(b) A bank contemplating a short-term loan.
(c) A common stockholder.