Question: Answer the questions below based on the following information. The tax rate is 35% and all dollars are in millions. Assume that the companies have

Answer the questions below based on the following information. The tax rate is 35% and all dollars are in millions. Assume that the companies have no liabilities other than the debt shown below.

Suunto Inc. Runrun Corp.

Earnings before interest and taxes Suunto: $280 Runrun: $294

Debt (at 10% interest) Suunto: $140 Runrun: $840

Equity Suunto: $560 Runrun: $210

a. Calculate each company's ROE, ROA, and ROIC. b. Why is Runrun's ROE so much higher than Suunto's? Does this mean Runrun is a better company. Why or why not? c. Why is Suunto's ROA higher than Runrun'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?

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

Suzuki Supply reports the following amounts at the end of 2024 (before adjustment). Credit Sales for 2024 Accounts Receivable, December 31, 2024 $244,000 39,000 1,100 (Credit) Allowance for...

I need these questions to be answered. I need them to be done by tonight 1Homework #3, Chapter 2 Fingame Course Spring 2016 True or False 1) Return on assets can be calculated as profit margin times...

Answer the questions below based on the following information. The tax rate is 35%, and all dollars are in millions Assume that the companies have no liabilities other than the debt shown below....

Answer the questions below based on the following information. The tax rate is 35% and all dollars are in millions. Assume that the companies have no liabilities other than the debt shown below....

Answer the questions below based on the following information. The tax rate is 35%, and all dollars are in millions. Assume that the companies have no liabilities other than the debt shown below....

Answer the questions below based on the following information. The tax rate is 3 5 % , and all dollars are in millions. Assume that the companies have no liabilities other than the debt shown below....

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...

Answer the questions below based on the following information. The tax rate is 40%, and all dollars are in millions. Assume that the companies have no liabilities other than the debt shown below. (in...

Are fixed formats for the key financial statements a good thing? If they are, why are several different ones allowed?

Linda Richmond and Eddie Durham had two children before they were divorced. Under the terms of their divorce decree, Durham obtained title to their house. When he died suddenly of a heart attack, the...

write five to seven bullet points outlining the responsibilities of a financial analyst. Use complete sentences.

9. (15 points) A company is considering a new project that requires an investment of \$5 million. The project is expected to generate cash flows of $2 million in year 1,$3 million in year 2, and $4...

This book covers four human resource management practice areas: managing the human resource environment, acquiring and preparing human resources, assessment and development of human resources, and...

Carry out a risk assessment exercise for an activity that you take part in. It might be a local amateur football or netball team, drama event or similar.