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QUESTION 3 (MODULE 3 - ANALYSIS OF ROE AND ITS BREAKDOWN): On the ground of the following financial data of the company, evaluate the change of its ROE (from 2015 to 2016), together with ROE's three drivers (net profitability, asset turnover and financial leverage), by answering the following questions: 1) Did the company's ROE grow or fall between 2015 and 2016? 2) Was the change of ROE (between 2015 and 2016) attributable more to the operating factors (profitability and turnover) or to the financial leverage? 3) Should the observed change of the company's ROE, combined with changes of its three drivers, be treated as a positive (or negative) one? Company's financial statements: Income statement Sales revenues 2015 234 146 2016 421 314 Operating profit 36 258 42 147 Net earnings 9 268 16 146 Balance sheet 31.12.2015 31.12.2016 Fixed assets 95 755 154 812 Current assets, including: 75 209 131 939 TOTAL ASSETS 170 964 286 751 Shareholder's equity 89 266 97 149 Long-term liabilities 34 177 42 945 Short-term liabilities, including: 47 521 146 657 TOTAL EQUITY AND LIABILITIES 170 964 286 751

QUESTION 3 (MODULE 3 - ANALYSIS OF ROE AND ITS BREAKDOWN): On the ground of the following financial data of the company, evaluate the change of its ROE (from 2015 to 2016), together with ROE's three drivers (net profitability, asset turnover and financial leverage), by answering the following questions: 1) Did the company's ROE grow or fall between 2015 and 2016? 2) Was the change of ROE (between 2015 and 2016) attributable more to the operating factors (profitability and turnover) or to the financial leverage? 3) Should the observed change of the company's ROE, combined with changes of its three drivers, be treated as a positive (or negative) one? Company's financial statements: Income statement Sales revenues 2015 234 146 2016 421 314 Operating profit 36 258 42 147 Net earnings 9 268 16 146 Balance sheet 31.12.2015 31.12.2016 Fixed assets 95 755 154 812 Current assets, including: 75 209 131 939 TOTAL ASSETS 170 964 286 751 Shareholder's equity 89 266 97 149 Long-term liabilities 34 177 42 945 Short-term liabilities, including: 47 521 146 657 TOTAL EQUITY AND LIABILITIES 170 964 286 751

Essentials Of Investments
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
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QUESTION 3 (MODULE 3 - ANALYSIS OF ROE AND ITS BREAKDOWN): On the ground of the following financial data of the company, evaluate the change of its ROE (from 2015 to 2016), together with ROE's three drivers (net profitability, asset turnover and financial leverage), by answering the following questions: 1) Did the company's ROE grow or fall between 2015 and 2016? 2) Was the change of ROE (between 2015 and 2016) attributable more to the operating factors (profitability and turnover) or to the financial leverage? 3) Should the observed change of the company's ROE, combined with changes of its three drivers, be treated as a positive (or negative) one? Company's financial statements: Income statement Sales revenues 2015 234 146 2016 421 314 Operating profit 36 258 42 147 Net earnings 9 268 16 146 Balance sheet 31.12.2015 31.12.2016 Fixed assets 95 755 154 812 Current assets, including: 75 209 131 939 TOTAL ASSETS 170 964 286 751 Shareholder's equity 89 266 97 149 Long-term liabilities 34 177 42 945 Short-term liabilities, including: 47 521 146 657 TOTAL EQUITY AND LIABILITIES 170 964 286 751
Transcribed Image Text:QUESTION 3 (MODULE 3 - ANALYSIS OF ROE AND ITS BREAKDOWN): On the ground of the following financial data of the company, evaluate the change of its ROE (from 2015 to 2016), together with ROE's three drivers (net profitability, asset turnover and financial leverage), by answering the following questions: 1) Did the company's ROE grow or fall between 2015 and 2016? 2) Was the change of ROE (between 2015 and 2016) attributable more to the operating factors (profitability and turnover) or to the financial leverage? 3) Should the observed change of the company's ROE, combined with changes of its three drivers, be treated as a positive (or negative) one? Company's financial statements: Income statement Sales revenues 2015 234 146 2016 421 314 Operating profit 36 258 42 147 Net earnings 9 268 16 146 Balance sheet 31.12.2015 31.12.2016 Fixed assets 95 755 154 812 Current assets, including: 75 209 131 939 TOTAL ASSETS 170 964 286 751 Shareholder's equity 89 266 97 149 Long-term liabilities 34 177 42 945 Short-term liabilities, including: 47 521 146 657 TOTAL EQUITY AND LIABILITIES 170 964 286 751
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