Selected income statement and balance sheet data from Merck & Co.for Year 9 are reproduced below:MERCK & COMPANY, INC.Year 9 Selected Financial Data ($ millions)Merck & Co.Income Statement DataSales revenue...Depreciation......Interest expense.$7,12023010Pretax income...2,550Income taxes..900Net income.1,650Balance Sheet DataCurrent assets...$4,850Fixed assets, net...2,400Total assets..7,250Current liabilities...3,290Long-term debt...100Shareholders' equity...3,860Total liabilities & shareholders' equity..Required:a. Calculate return on common equity for Year 9 using year-endamounts and assuming no preferred dividends.b. Disaggregate Merck's ROCE. Comment on Merck's use ofleverage. (Assume all assets and current liabilities are operatingand a 35% tax rate.).c. Disaggregate ROA and comment on that.

The objective of the question is to calculate and analyze the financial performance of Merck &…

Answered: Selected income statement and balance…

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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