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

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

a. Compute the 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: 9781260013917

17th Edition

Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen

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Question Posted: May 27, 2022 09:33 AM

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

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. $ 140,000 2,700,000 965,000 542,000 423,000

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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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