Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Financial Ratios
A Ratio refers to a figure calculated as a reference to the relationship of two or more numbers and can be expressed as a fraction, proportion, percentage, or the number of times. When the number is determined by taking two accounting numbers derived from the financial statements, it is termed as the accounting ratio.
Return on Equity
The Return on Equity (RoE) is a measure of the profitability of a business concerning the funds by its stockholders/shareholders. ROE is a metric used generally to determine how well the company utilizes its funds provided by the equity shareholders.
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Transcribed Image Text:b. What is that ratio for nonfinancial firms? (Table 1.4) (Round your answer to 4 decimal places.)
The ratio for nonfinancial firms
Transcribed Image Text:TABLE 1.4 Balance sheet of U.S. nonfinancial corporations
Assets
Real assets
Equipment & intellectual property
Real estate
Inventories
Total real assets
Financial assets
Deposits and cash
Marketable securities
Trade and consumer credit
Other
Total financial assets
Total
$ Billion % Total
$ 7,874
13,472
2,561
$ 23,907
$ 1,151
2,979
3,343
14,263
21,736
$ 45,643
17.3%
29.5
5.6
52.4%
2.5%
6.5
7.3
31.2
47.6
100.0%
Liabilities and Net Worth
Liabilities
Bonds and mortgages
Bank loans & mortgages
Other loans
Trade debt
Other
Total liabilities
Net worth
Note: Column sums may differ from total because of rounding error.
Source: Flow of Funds Accounts of the United States, Board of Governors of the Federal Reserve System, June 2019.
$ Billion
$ 6,407
1,743
1,776
2,518
7,437
$ 19,881
$ 25,762
$ 45,643
% Total
14.0%
3.8
3.9
5.5
16.3
43.6%
56.4%
100.0%
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