Question: Computing Return on Equity and Return on Assets The following table contains financial statement information for Walmart Stores Inc. $ millions Total Assets Net Income

Computing Return on Equity and Return on Assets The following table contains financial statement information for Walmart Stores Inc.

$ millions Total Assets Net Income Sales Equity 2015 . . . . . . . . . . . . . . . . . . . . . . . $199,581 $14,694 $478,614 $80,546 2014 . . . . . . . . . . . . . . . . . . . . . . . 203,490 16,363 482,229 81,394 2013 . . . . . . . . . . . . . . . . . . . . . . . 204,751 16,022 473,076 76,255 Required

a. Compute the return on equity (ROE) for 2014 and 2015. What trend, if any, is evident? How does Walmart’s ROE compare with the approximately 18.9% median ROE for companies in the Dow Jones Industrial average for 2015?

b. Compute the return on assets (ROA) for 2014 and 2015. What trends, if any, are evident? How does Walmart’s ROA compare with the approximate 7.1% median ROA for companies in the Dow Jones Industrial average for 2015?

c. What factors might allow a company like Walmart to reap above-average returns?

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