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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Concept explainers
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.
Topic Video
Question
Transcribed Image Text:The Coca-Cola Company reported the following financial data (amounts in millions):
Sales
Net income (loss)
Year Ended December 31,
2016 2015 2014
$48,863 $44,294 $45,998
6,527 7,351 7,098
856
483
0
0
35%
Interest expense
733
Preferred stock dividend 0
Income tax rate
December 31:
35%
35%
2016
2015
$87,270 $89,996
Total assets
Preferred stock
0 0
Total common shareholders' equity 23,062 25,554
O c. 14.3%, 0.56, and 3.78.
O d. 13.4%, 0.55, and 3.65.
Using average balances for any balance sheet amounts, profit margin for ROCE, total assets turnover, and capital structure leverage, respectively, are
O a. 13.4%, 0.56, and 3.78.
O b. 14.3%, 0.55, and 3.65.
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