Business
Finance
Answer the questions below based on the following information. The

Answer the questions below based on the following information. The tax rate is 35 percent and all

Question:

Answer the questions below based on the following information. The tax rate is 35 percent and all dollars are in millions.

a. Calculate each company's ROE, ROA, and ROIC.
b. Why is Stork's ROE so much higher than Locktite's? Does this mean Stork is a better company? Why or why not?
c. Why is Locktite's ROA higher than Stork's? What does this tell you about the two companies?
d. How do the two companies' ROICs compare? What does this suggest about the two companies?

Transcribed Image Text:

Locktite Inc. Earnings before interest and taxes Debt (at 10% interest) Equity S380 S240 S760 Stork Systems $ 394 $1,240 $ 310

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Answer rating: 41% (12 reviews)

a b Storks higher ROE is a natural reflection of its higher financial leverage It doe...View the full answer

Answered By

Kainat Shabbir

i am an experienced qualified expert with a long record of success helping clients overcome specific difficulties in information technology, business and arts greatly increasing their confidence in these topics. i am providing professional services in following concerns research papers, term papers, dissertation writing, book reports, biography writing, proofreading, editing, article critique, book review, coursework, c++, java, bootstarp, database.

5.00+ 184+ Reviews 255+ Question Solved

Related Book For book-img-for-question

Analysis for Financial Management

ISBN: 978-0078034688

10th edition

Authors: Robert C. Higgins

See More Books

Question Posted: Jan 24, 2017 09:05 AM

See More Questions

Students also viewed these Finance questions

The shareholders equity section of the balance sheet of Marks and Spencer, a retail company based in the United Kingdom, is reproduced below. Review this information and answer the questions below....
Answer the questions below for assets A to D shown in the table. Asset Beta A ...... 0.50 B ...... 1.60 C ...... 0.20 D ...... 0.90 a. What impact would a 10% increase in the market return be...
Use the following information to answer the questions below. Assume that the capital account is equal to 0. Net unilateral transfers .. 50 Exports of goods and services ..500 Net increase in the U.S....
The registers values in AX and BX can be exchanged using stack operations that are: Select one: a. PUSH bx PUSH ax POP bx POP AX b. none C. PUSH ax PUSH bx POP ax POP bx d. PUSH ax POP ax PUSH bx POP...
Head-First Company plans to sell 5,000 bicycle helmets at $70 each in the coming year. Variable cost is 70 percent of the sales price; contribution margin is 30 percent of sales price. Total fixed...
The following data are for Rocky Company. (a) Compute Rockys accounts receivable turnover. (b) If its competitor, Dixon, has an accounts receivable turnover of 7.5, which company appears to be doing...
A steel punch can apply maximum compressive load $1000 \mathrm{kN}$. Find the minimum diameter of the hole, which can be punched through a $10 \mathrm{~mm}$ thick steel plate. Assume ultimate...
a. Distinguish between (1) exchange and (2) nonexchange transactions. b. Identify and describe the four eligibility requirements for a government to recognize revenue in a nonexchange transaction. c....
Program for find distance between two Coordinate points of (x1,y1), (x2,y2)?
As an expert, you are permitted to opine regarding the ultimate issue. You are in court and are asked to testify as to whether the defendant's actions are consistent with a particular fraudulent...
Financial data for Industrial Inc follows: ($ in thousands) a. Calculate the current and quick ratio at the end of each year. How has the company's short-term liquidity changed over this period? b....
You are trying to prepare financial statements for Bartlett Pickle Company, but seem to be missing its balance sheet. You have Bartlett's income statement, which shows sales last year were $420...
Define public relations and name the types of internal and external stakeholders reached by public relations programs.
Refer to Figure 9-1. Suppose the government allows imports of leather footwear into the United States. The market price falls to $18. What is the value of consumer surplus? O $320. O $0. O $305. O...
A bucket that has a mass of 15 kg when filled with sand needs to be lifted to the top of a 25 meter tall building. You have a rope that has a mass of 0.1 kg/m that must be secured to the bucket. It...
Discuss each step in the marketing research proposal to determine whether online shopping has increased in South Africa as a result of the high fuel prices. Discuss the plan and framework of the...
Salty Ltd has two Cash Generating Units (CGU's) identified as the Sand CGU and the Sun CGU. The carrying amounts of the assets of the two CGU's at 30 June 20X1, were: Sand CGU 50,000 (10,000) Plant...
24. Assume that the resting heart rate in humans is normallydistributed with a population mean of 72 bpm and a standarddeviation of 8 bpm. a. What proportion of the population has resting heart...
Classify each of the following descriptions as either a proximate or an ultimate cause of behavior. For all proximate causes, speculate about a possible ultimate cause of the behavior. a. A surge of...
Arlington Merchants reported the following on its income statement for the fiscal years ending December 31, 2016 and 2015. 2016 2015 Sales $4,857,500 $4,752,900 Cost of goods sold 3,258,950 3,207,000...
A developer offers lots for sale at $60,000, $10,000 to be paid down and $10,000 to be paid at the end of each of the next five years with "no interest to be charged." In discussing a possible...
Consider the following investment opportunity. Initial cost at time 0 .................................................... $15 million Annual revenues beginning at time 1...
Table 3.1 in Chapter 3 presents financial statements over the period 20142017 for R&E Supplies, Inc. a. Construct a sources and uses statement for the company over this period (one statement for all...
A government fund owns equipment worth $100,000 that is depreciated on a straight line basis for its useful life of 10 years. Each year the government spends $4,000 to maintain the equipment. What...
Southern Alliance Company needs to raise $24 million to start a new project and will raise the money by selling new bonds. The company will generate no internal equity for the foreseeable future. The...
During a semester, a class of n=50 students took two exams: a midterm and a final. The mean score for the midterm exam is 80 points with the standard deviation of 6 points. The mean score for the...

Practical Book Of Pharmaceutics I 1st Edition - ISBN: B0BCZ76Y4L - Free Book

Study smarter with the SolutionInn App