ROE? Financial Accounting: The Saw Millhas a return on assets of 7.1 percent,a total asset turnover rate of 1.9, anda debt-equity ratio of 1.8. What is thereturn on equity?

To calculate the Return on Equity (ROE), we use the DuPont formula, which links ROE, Return on…

Answered: Financial Accounting: The Saw Mill has…

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter12: Fainancial Statement Analysis

Section: Chapter Questions

Problem 19MCQ

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The following is selected financial data from Block Industries: How much does Block Industries have in current liabilities? A. $19,800 B. $18,300 C. $12,300 D. $25,800
Define each of the following terms: Liquidity ratios: current ratio; quick, or acid test, ratio Asset management ratios: inventory turnover ratio; days sales outstanding (DSO); fixed assets turnover ratio; total assets turnover ratio Financial leverage ratios: debt ratio; times-interest-earned (TIE) ratio; EBITDA coverage ratio Profitability ratios: profit margin on sales; basic earning power (BEP) ratio; return on total assets (ROA); return on common equity (ROE) Market value ratios: price/earnings (P/E) ratio; price/cash flow ratio; market/book (M/B) ratio; book value per share Trend analysis; comparative ratio analysis; benchmarking DuPont equation; window dressing; seasonal effects on ratios
What information can best be elicited from a receivable ratio? A. company performance with current debt collection B. credit extension effect on cash sales C. likelihood of future customer bankruptcy filings D. an increase in future credit sales to current customers
Liquidity Ratios JRLs financial statements contain the following information: Required: 1. What is its current ratio? 2. What is its quick ratio? 3. What is its cash ratio? 4. Discuss JRLs liquidity using these ratios.
From the Google Finance site, use the DuPont analysis to determine the total assets turnover ratio for each of the peer companies. (Hint ROA = Profit margin Total assets turnover.) Once youve calculated each peers total assets turnover ratio, then you can use the DuPont analysis to calculate each peers equity multiplier.
Return on assets The following data (in millions) were adapted from recent financial statements of Tootsie Roll Industries Inc. (TR): The percent a company adds to its cost of sales to determine selling price is called a markup. What is Tootsie Roll’s markup percent? Round to one decimal place.
The average liabilities, average stockholders' equity, and average total assets are as follows: 1. Determine the following ratios for both companies, rounding ratios and percentagesto one decimal place: a. Return on total assets b. Return on stockholders' equity c. Times interest earned d. Ratio of total liabilities to stockholders' equity 2. Based on the information in (1), analyze and compare the two companies'solvency and profitability. Comprehensive profitability and solvency analysis Marriott International, Inc., and Hyatt Hotels Corporation are two major owners and managers of lodging and resort properties in the United States. Abstracted income statement information for the two companies is as follows for a recent year (in millions): Balance sheet information is as follows:
If equity equals $100,000, which of the following is true? A. Assets exceed liabilities by $100,000. B. Liabilities exceed equity by $100,000. C. . D. None of the above is true.
Ratio Analysis Consider the following information. Required: Calculate the stockholder payout ratios. (Note: Round answers to two decimal places.) Calculate the stockholder profitability ratios. (Note: Round answers to two decimal places.)
Which of the following is a measurement of earnings that represents the profit before interest, taxes, depreciation and amortization are subtracted? A. net income B. retained earnings C. EBITDA D. EPS
Using the following Balance Sheet summary information, calculate for the two companies presented: A. working capital B. current ratio Then: A. evaluate which companys liquidity position appears stronger, and why.
Refer to the financial state-ment data for Abercrombie Fitch in Problem 4.25 in Chapter 4. Exhibit 5.16 presents risk ratios for Abercrombie Fitch for fiscal Year 3 and Year 4. Exhibit 5.16 REQUIRED a. Compute the amounts of these ratios for fiscal Year 5. b. Assess the changes in the short-term liquidity risk of Abercrombie Fitch between fiscal Year 3 and fiscal Year 5 and the level of that risk at the end of fiscal Year 5. c. Assess the changes in the long-term solvency risk of Abercrombie Fitch between fiscal Year 3 and fiscal Year 5 and the level of that risk at the end of fiscal Year 5.

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Financial Accounting: The Saw Mill has a return on assets of 7.1 percent, a total asset turnover rate of 1.9, and a debt-equity ratio of 1.8. What is the return on equity?