Compute return on stockholders equity for both firms

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Reference no: EM13327242

Problem

Interpreting results from the Du Pont system of analysis

Assume the following data for Cable Corporation and Multi-Media, Inc.

 

Cable
Corporation

Multi
Media, Inc.

  Net income

$

30,700

 

$

139,000

 

  Sales

 

314,000

 

 

2,120,000

 

  Total assets

 

468,000

 

 

925,000

 

  Total debt

 

194,000

 

 

478,000

 

  Stockholders' equity

 

274,000

 

 

447,000

 

 


1) Compute return on stockholders' equity for both firms.

 

Return on
stockholders' equity

  Cable Corporation

 

  Multi Media, Inc.

 


2) Which firm has the higher return?

(b) Compute the following additional ratios for both firms.

 

Cable Corporation

Multi-Media, Inc.

  Net income / Sales

 

 

  Net income / Total assets

 

 

  Sales / Total assets

 

 

  Debt / Total assets

 

 


Reference no: EM13327242

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