Below are summarized balance sheets and income statements of three U.S. companies:
a. Compute the working capital requirement of the three firms and prepare their managerial balance sheets.
b. Compute the three firms’ operating margin, invested capital turnover, return on capital employed, financial multiplier, and the tax effect. What is the relationship between these ratios and the firms’ return on equity?
c. One firm is in the retail (nongrocery) industry, another is a utility firm, and the last one is in the computer (software) industry. Which of the companies corresponds to Firm 1, Firm 2, and Firm 3?

  • CreatedMarch 27, 2015
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