Respuesta :
A corporation will reduce by using more debt in its capital structure if the interest rate on debt is lower than ROA.
Equity decreases when debt increases, and since equity is the basis for ROE, this has the effect of increasing ROE. Additionally, a company's total assets—the ROA denominator—increase when it borrows money. As a result, debt raises ROE in comparison to ROA.
While Return on asset (ROA) is established by looking at corporate profitability following the purchase of assets like manufacturing equipment and technology, ROI is derived by looking at profits created via invested capital. The ROA demonstrates the profit generated by significant shareholder investments in the company.
A financial measure called return on equity (ROE) shows you how much net income a firm makes for every dollar of invested capital. This ratio is crucial because it enables investors to comprehend how well a company uses its money to produce profit.
The question is incomplete. The complete question is:
If the interest rate on debt is lower than ROA, then a firm will __________ by increasing the use of debt in the capital structure.
To learn more about Return on asset (ROA), refer
https://brainly.com/question/28478234
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