Computing, Analyzing, and Interpreting Return on Equity and Return on Assets

Following are summary financial statement data for Logitech International for 2016 through 2018.

$ thousands	2018	2017	2016
Sales	$2,720,875	$2,354,713	$2,139,186
Net income	216,884	214,111	124,090
Total assets	1,917,473	1,648,545	1,456,562
Equity	1,113,590	907,478	805,545

a. Compute the return on assets (ROA) for 2018 and 2017. Round answers to one decimal place (ex: 0.2345 = 23.5%).

2018	2017
Answer	Answer

b. Compute the profit margin (PM) for 2018 and 2017. Round answers to one decimal place (ex: 0.2345 = 23.5%).

2018	2017
Answer	Answer

c. Compute the asset turnover (AT) for 2018 and 2017. Round answers to two decimal places.

2018	2017
Answer	Answer

d. Which component of ROA (profit margin or asset turnover or both) drives the change in ROA in 2018? AnswerAsset turnoverProfit marginBoth

e. Compute the return on equity (ROE) for 2018 and 2017. Round answers to one decimal place (ex: 0.2345 = 23.5%).

2018	2017
Answer	Answer

f. Logitech repurchased common shares in 2018 at a cost of $30 million. Did this repurchase increase or decrease the companys ROE? AnswerIncreaseDecrease