Your third challenge is to advise Kaj on what has been happening to Scandi relative to financial developments in the home furnishings industry.
G. Kaj has been able to obtain some industry ratio data from the home furnishings industry trade association to which he belongs. The industry association collects proprietary financial information from members of the association, compiles averages to protect the proprietary nature of the information, and provides averages for use by individual trade association members. Trade association data for the home furnishings industry show an average net profit margin of 6.5 percent, a salesto-assets ratio of 1.3 times, and a total-debt-to-total-assets ratio of 55 percent over the 2014 – 2015 and 2015 – 2016 periods. Compare and contrast Scandi ’ s results with the industry average in terms of the ROA and ROE models. Make sure you compare the components of each model as well as the product of the components.
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Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
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