RadioShack Corporation reported the following amounts (in millions) in its income statement and balance sheet.
2010 2009 2008
Total Revenue............... $4,473......... $4,276......... $4,225
Net Income...................... 206............. 205............ 189
Total Assets.................... 2,175.......... 2,429.......... 1,990
Total Liabilities.................. 640............ 660............ 348
Required:
1. Compute the asset turnover and net profit margin ratios for 2010 and 2009.
2. Would analysts be more likely to increase or decrease their estimates of stock value on the basis of these changes? Explain what the changes in these two ratios mean.
3. Compute the debt-to-assets ratio for 2010 and 2009.
4. Would analysts be more likely to increase or decrease their estimates of RadioShack's ability to repay lenders on the basis of this change? Explain by interpreting what the change in this ratio means.