Merlin Company has provided the following comparative information: You have been asked to evaluate the historical performance

Question:

Merlin Company has provided the following comparative information:


Merlin Company has provided the following comparative informatio


You have been asked to evaluate the historical performance of the company over the last five years.
Selected industry ratios have remained relatively steady at the following levels for the last five years:
2006–2010
Rate earned on total assets .........12%
Rate earned on stockholders' equity ......18%
Number of times interest charges earned ...2.8
Ratio of liabilities to stockholders' equity ....1.6
Instructions
1. Prepare four line graphs with the ratio on the vertical axis and the years on the horizontal axis for the following four ratios (rounded to one decimal place):
a. Rate earned on total assets
b. Rate earned on stockholders' equity
c. Number of times interest charges earned
d. Ratio of liabilities to stockholders' equity
Display both the company ratio and the industry benchmark on each graph. That is, each graph should have two lines.
2. Prepare an analysis of the graphs in(1).

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Managerial Accounting

ISBN: b010ikdqzm

10th Edition

Authors: Carl S. Warren, James M. Reeve, Jonathan E. Duchac

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