Solution-Compute the 2016 ROA and ROE

Compute the 2016 ROA and ROE

Reference no: EM133097893

Question:

a. Use the profit margin and asset turnover to compute the 2015

ROA for OBMM. Now introduce the equity multiplier to find ROE.

b. Use the summary financial information to compute the 2016 ROA and ROE. Use the same procedures to calculate these measures as you did in part a.

c. On the basis of your calculations, describe how each of the three components (profit margin, asset turnover, and leverage) contributed to the change in OBMM's ROA and ROE between 2015 and 2016. Which component(s) contributed the most to the change in ROA? Which contributed the most to the change in ROE?

d. Generally speaking, do you think that these changes are fundamentally healthy for the company?

	2016 ($ in millions)	2015 ($ in millions)
Sales revenue	$262.60	$180.60
Total assets	$304.30	$130.40
Net earnings	$31.30	$18.50
Shareholders' equity	$218.10	$113.30

Reference no: EM133097893

Questions Cloud

Age discrimination in employment act : Detailed in Module-Equal Employment Opportunity Commission enforces Title VII of the Civil Rights Act of 1964,Age Discrimination in Employment Act

Determine balances for the items that would appear : Determine balances for the items that would appear on consolidated financial statements for 2021: Cost of Goods Sold Inventory

International diversification : Discuss the advantages-disadvantages of closed-end country funds relative to American depository receipts as means of international diversification.

What are the net operating cash flows in years : What are the net operating cash flows in Years 1, 2, and 3 and What is the additional Year-3 cash flow (i.e, the after-tax salvage and the return of working

Compute the 2016 ROA and ROE : Use the summary financial information to compute the 2016 ROA and ROE. Use the same procedures to calculate these measures as you did in part a

Innovative alternatives to conventional materials : Do you think that people are paying more attention to clothing manufacturers' use of innovative alternatives to conventional materials?

Discuss the strategies-goals and sensitivities : Consider your favorite product and discuss the strategies, goals, and sensitivities of the customer from both the B2B and B2C perspectives.

Unprecedented challenges and uncertainties : The pandemic has thrust upon us unprecedented challenges and uncertainties. How has consumer behavior - the way consumers shop and interact with brands

Healthcare advocacy plan : You will communicate a healthcare advocacy plan. You will contact either a local healthcare agency

User Account

All Pages

Compute the 2016 ROA and ROE

Reference no: EM133097893

Reference no: EM133097893

Questions Cloud

Reviews

Write a Review

Finance Basics Questions & Answers

Financial reporting and analysis

A report on financial accounting

Describe the types of financial ratios

Differences between sole proprietorship and corporation

Prepare a cash budget statement

What are the implied interest rates

State pricing theory and no-arbitrage pricing theory

Small business administration

Effect of financial leverage

Evaluate the basis for the payment to the lender

Importance of opps, ipps, mpfs and dmepos

Time value of money

Assured A++ Grade

Academics

Major Subjects

Majors

Get In Touch

TERMS & POLICIES

HELP & SUPPORT