There are two companies (Heart and Apt). Here is financial data from the past year. All dollar amounts for sales, total assets and net income are in millions. The risk free rate (UST securities) = 4%. hearts: Sales $ 9,350 $ 8,930 Net Income $ 902 $ 1,460 ROA 8.8% 7.6% ROE 30.2% 13.96% Current ratio 1.88x 2.17x Shares outstanding 238m 219m Beta 2.58 0.98 Stock price $18.79/sh. $159.00/sh. P/E ratio 4.97 23.9 (S&P 500 is 17) Earnings per share $3.79 $6.65 Total Assets $10,244 $19,178 For this problem it might be helpful to use the DuPont equation. Based on the financials, which company has the most market risk? Why? Which company has the strongest liquidity position? Why? Which company uses the most leverage (debt)? Why? For an incremental dollar of sales, how much falls to the bottom line?
There are two companies (Heart and Apt). Here is financial data from the past year. All dollar amounts for sales, total assets and net income are in millions. The risk free rate (UST securities) = 4%.
hearts:
Sales $ 9,350 $ 8,930
Net Income $ 902 $ 1,460
Current ratio 1.88x 2.17x
Shares outstanding 238m 219m
Beta 2.58 0.98
Stock price $18.79/sh. $159.00/sh.
P/E ratio 4.97 23.9 (S&P 500 is 17)
Earnings per share $3.79 $6.65
Total Assets $10,244 $19,178
For this problem it might be helpful to use the DuPont equation.
- Based on the financials, which company has the most market risk? Why?
- Which company has the strongest liquidity position? Why?
- Which company uses the most leverage (debt)? Why?
- For an incremental dollar of sales, how much falls to the bottom line?
- Calculate the Total Asset Turnover. Which company is more efficient?
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