The following information relates to Lowell, Inc. (All numbers in thousands) 2019 2020 Total Assets $437,000 $450,000
Question:
- The following information relates to Lowell, Inc. (All numbers in thousands)
2019 | 2020 | |
| Total Assets | $437,000 | $450,000 |
| Stockholders’ Equity | 133,000 | 138,000 |
| Net Sales Revenue | 290,000 | 270,000 |
| Net Income | 27,000 | 32,000 |
Calculate the following financial ratios for Lowell in 2019 and 2020:
Return on equity (ROE)
2019:
2020:
What does this trend indicate?
Return on sales (ROS)
2019:
2020:
What does this trend indicate?
Asset turnover
2019:
2020:
What does this trend indicate?
Financial leverage
2019:
2020:
What does this trend indicate?
Based on decomposing ROE into return on sales, asset turnover, and financial leverage, why did Lowell’s ROE change from 2019 to 2020?
Expert Answer:
1 Return on Equity ROE ROE Net Income Shareholders Equity 2019 ROE 27000133000 020300752 100 20300752 203 2020 ROE 32 000138000 023188406 100 23188406 ... View the full answer
Financial Accounting A User Perspective
ISBN: 978-0470676608
6th Canadian Edition
Authors: Robert E Hoskin, Maureen R Fizzell, Donald C Cherry
