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a.Compute the 2017 return on assets (ROA) for both companies. b.Disaggregate ROA into profit margin (PM) and asset turnover (AT) for each company. Confirm that ROA = PM x AT. c.Discuss differences observed with respect to PM and AT and interpret these differences in light of each company’s business model.

a.Compute the 2017 return on assets (ROA) for both companies. b.Disaggregate ROA into profit margin (PM) and asset turnover (AT) for each company. Confirm that ROA = PM x AT. c.Discuss differences observed with respect to PM and AT and interpret these differences in light of each company’s business model.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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a.Compute the 2017 return on assets (ROA) for both companies.

b.Disaggregate ROA into profit margin (PM) and asset turnover (AT) for each company. Confirm that ROA = PM x AT.

c.Discuss differences observed with respect to PM and AT and interpret these differences in light of each company’s business model.

Selected balance sheet and income statement information from Urban Outfitters, Inc. and TJX Companies, clothing retailers in the high-end and value-priced segments, respectively, follows. 2017 Earnings 2017 Without Interest 2017 Total 2016 Total Company ($ millions) Sales Expense (EWI) Assets Assets $ 108 2,653 $ 1,903 $ 3,616 35,865 $ 1,953 14,058 Urban Outfitters TJX Companies 12,884
Transcribed Image Text:Selected balance sheet and income statement information from Urban Outfitters, Inc. and TJX Companies, clothing retailers in the high-end and value-priced segments, respectively, follows. 2017 Earnings 2017 Without Interest 2017 Total 2016 Total Company ($ millions) Sales Expense (EWI) Assets Assets $ 108 2,653 $ 1,903 $ 3,616 35,865 $ 1,953 14,058 Urban Outfitters TJX Companies 12,884
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