Chapter 14, Problem 7CP

Summary Introduction

(A)

Introduction:

Return on Equity: Return on equity is a measure of financial performance by dividing net income by shareholder equity.

Asset Turnover:

The assets turnover ratio is an efficiency ratio that measure company's ability to produce sales form using its assets by comparing net sale with average total assets.

Financial Leverage:

An equity ratio measures the amount of assets that are financial by owner investment by comparing the equity in the company to the asset.

Interest burden: The interest burden ratio is used to determine how easily a company pays their interest expense on long term debt.

To determine:

The five components listed in 2013 and 2016 and the return on equity (ROE) for 2013 and 2016 using all the five components.

Summary Introduction

(B)

Introduction:

Return on Equity:

Return on equity is a measure of financial performance by dividing net income by shareholder equityAsset Turnover:

The assets turnover ratio is an efficiency ratio that measure company's ability to produce sales form using its assets by comparing net sale with average total assets.

Financial Leverage:

An equity ratio measure the amount of assets that are financial by owner investment by comparing the equity in the company to the asset..Interest burden:

The interest burden ratio is used to determine how easily a company pays their interest expense on long term debt.