Use the Following Data to Answer Questions -By Comparing Fraggle Rock's ROE and ROA, the Following Conclusions

Multiple Choice

Use the following data to answer questions .
From the year-end financial statements of Fraggle Rock Ltd: $$\begin{array} { l r c } & \text { Common } & \text { Preferred } \\\text { Average shareholders' equity } & \$ 1,500,000 & \$ 120,000 \\\text { Average number of shares outstanding } & 100,000 & 30,000 \\\text { Dividends paid } & 50,000 & 90,000 \\\text { Net Income } & \$ 340,000 \\\text { Interest expense } & \$ 22,000 \\\text { Average Total assets } & \$ 2,535,000\end{array}$$
-By comparing Fraggle Rock's ROE and ROA, the following conclusions can be drawn:

A) the company has effectively used leveraging to increase the shareholders' return.
B) the company has effectively used leveraging and compromised investor return
C) the company is over leveraged and needs to reduce its debt levels
D) the company is currently carrying no long term debt