a$.$ Calculate return on common equity and disaggregate ROCE for Years $5$ and $9$ using end$-$of$-$year values for computations requiring an average $($assume fixed assets and working capital are operating and a $50\%$ tax rate$).$PROBLEM $8-5$

Disaggregating and

Analyzing Retum

on Common Equity

CHECK

$($a$)$ Yr$.5$ RNOA $=10\mathrm{.}0\%$

Selected financial statement data from Texas Telecom, Inc., for Years $5$ and $9$ are reproduced

below $($ $ millions$)$:

Required:

a$.$ Calculate return on common equity and disaggregate ROCE for Years $5$ and $9$ using end$-$of$-$year values for com$-$

putations requiring an average $($assume fixed assets and working capital are operating and a $50\%$ tax rate$).$

b$.$ Comment on Texas Telecom's use of financial leverage.