In 2005 IBM had a return on equity of 26.7 percent, whereas Hewlett-Packards return was only 6.4
Question:
In 2005 IBM had a return on equity of 26.7 percent, whereas Hewlett-Packard’s return was only 6.4 percent. Use the decomposed ROI framework to provide possible reasons for this difference based on the data below:
IBM HP
NOPAT/Sales 9.0% 2.7%
Sales/Net Assets 2.16 2.73
Effective After-Tax Interest Rate 2.4% 1.1%
Net Financial Leverage 0.42 -0.16
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Related Book For
Business Analysis Valuation Using Financial Statements
ISBN: 978-1111972301
5th edition
Authors: Paul M. Healy
Question Posted: