An analyst is examining the profitability of three Asian companies with large shares of the global personal computer market: Acer Inc. (Taiwan SE: ACER), Lenovo Group Limited (HKSE: 0992), and Toshiba Corporation (Tokyo SE: 6502). Taiwan-based Acer has pursued a strategy of selling its products at affordable prices. In contrast, China-based Lenovo aims to achieve higher selling prices by stressing the high engineering quality of its personal computers for business use. Japan-based Toshiba is a conglomerate with varied product lines in addition to computers. For its personal computer business, one aspect of Toshiba’s strategy has been to focus on laptops only, in contrast with other manufacturers that also make desktops. Acer reports in New Taiwan dollars (TW$), Lenovo reports in US dollars (US$), and Toshiba reports in Japanese yen (JP¥).

For Acer, fiscal year end is 31 December. For both Lenovo and Toshiba, fiscal year end is 31 March; thus, for these companies, FY2009 ended 31 March 2010.

The analyst collects the data shown in Exhibit 2 below. Use this information to answer the following questions:

1. Which of the three companies is largest based on the amount of revenue, in US$, reported in fiscal year 2009? For FY2009, assume the relevant, average exchange rates were 32.2 TW$/US$ and 92.5 JP¥/US$.

2. Which company had the highest revenue growth from FY2005 to FY2009?

3. How do the companies compare, based on profitability?

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EXHIBIT 2 ACER TW$ Millions Revenue Gross profit Net income FY2005 318,088 34,121 8,478 FY2006 FY2007 FY2008 350,816 462,066 546,274 47,418 57,286 12,959 11,742 38,171 10,218 FY2009 573,983 58,328 11,353