M5-22. Compute ROA, Profit Margin and Asset Turnover for Competitors Selected balance sheet and income statement...

  

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M5-22. Compute ROA, Profit Margin and Asset Turnover for Competitors Selected balance sheet and income statement information from Urban Outfitters, Inc. and TJX Companies, clothing retailers in the high-end and value-priced segments, respectively, follows. Company ($ millions) Urban Outfitters...... TJX Companies. **** C. 2014 Sales $ 3,323 29,078 2014 Earnings Without Interest Expense (EWI) $ 232.4 2,241.0 2014 Total 2013 Total Assets Assets $ 1,889 11.128 $ 2,221 10,201 a. Compute the 2014 return on assets (ROA) for both companies. b. Disaggregate ROA into profit margin (PM) and asset turnover (AT) for each company. Confirm that ROA = PM X AT. Discuss differences observed with respect to PM and AT and interpret these differences in light of each company's business model. M5-22. Compute ROA, Profit Margin and Asset Turnover for Competitors Selected balance sheet and income statement information from Urban Outfitters, Inc. and TJX Companies, clothing retailers in the high-end and value-priced segments, respectively, follows. Company ($ millions) Urban Outfitters...... TJX Companies. **** C. 2014 Sales $ 3,323 29,078 2014 Earnings Without Interest Expense (EWI) $ 232.4 2,241.0 2014 Total 2013 Total Assets Assets $ 1,889 11.128 $ 2,221 10,201 a. Compute the 2014 return on assets (ROA) for both companies. b. Disaggregate ROA into profit margin (PM) and asset turnover (AT) for each company. Confirm that ROA = PM X AT. Discuss differences observed with respect to PM and AT and interpret these differences in light of each company's business model.

Answer rating: 100% (QA)

To compute the 2014 return on assets ROA for both Urban Outfitters and TJX Companies we use the formula ROA Earnings Without Interest Expense EWI Tota... View the full answer