Assume the following data for Cable Corporation and Multi-Media Inc. a. Compute return on stockholders equity for

Question:

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

a. Compute return on stockholders’ equity for both firms using ratio 3a. Which firm has the higher return?

b. Compute the following additional ratios for both firms.
Net income/Sales
Net income/Total assets
Sales/Total assets
Debt/Total assets

c. Discuss the factors from part b that added or detracted from one firm having a higher return on stockholders’ equity than the other firm as computed in part a.

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Foundations of Financial Management

ISBN: 978-1259194078

15th edition

Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen

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Question Posted: Oct 14, 2014 06:31 AM

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Assume the following data for Cable Corporation and Multi-Media Inc. a. Compute return on stockholders equity for

Question:

Net income Sales Total assets Total debt Stockholders' equity Cable Corporation $31.200 317,000 402.000 163,000 239,000 Multi- Media Inc. S 140,000 2,700,000 965.000 542,000 423,000

Step by Step Answer:

a MultiMedia Inc has a much higher return on stockholders equity than Cable Corporation b c As previ...View the full answer

Foundations of Financial Management

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