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 $ 280 $ 294 Debt (at 10 interest) $ 140 $ 840 Equity $ 560 $ 210 a Calculate each companys ROE, ROA, and ROIC b Why is Runruns ROE so much higher than Suuntos Does this mean Runrun is a better company Why or why not c Why is Suuntos ROA higher than Runruns 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

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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	$	280	$	294
Debt (at 10% interest)	$	140	$	840
Equity	$	560	$	210

a. Calculate each companys ROE, ROA, and ROIC.

b. Why is Runruns ROE so much higher than Suuntos? Does this mean Runrun is a better company? Why or why not?

c. Why is Suuntos ROA higher than Runruns? 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?

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