The overarching goal for this problem is to calculate and evaluate trends in key financial performance metrics including RI and ROE. The learning objectives are to analyze Prestige’s performance on four key financial metrics, evaluate the company’s performance as captured by the financial metrics, and use Excel graphical presentation to illustrate key performance trends.

Your task on this assignment is to calculate Prestige Auto’s RI, ROI (invested capital, or the sum equity and long- term debt such as mortgages), RONA , and ROE. You will then make two graphs, one for RI for the 10 years and another for the combined result s of your ROI, RONA , and ROE for the 10 years.

The data work sheets used in analysis for this problem are: Income Statement 12-31-x6, Balance Sheet 12-31-20x6, Corp Ten Year Income Statement , and Corp Ten Year Balance Sheet . You will need to complete the DB Problem 11.1 Template.

Let us begin with RI. Here, we need to take net income and subtract the WACC times the invested capital, which is mortgage payable plus common stock and retained earnings.

Next , move on to ROI (or invested capital). Here, we need to divide net income by the sum of long- term debt (mortgage payable) and equity (common stock and retained earnings).

The next calculation is RONA . This is a simple calculation in which we divide net income by total net assets.

The final calculation is ROE. Here we will need to divide net income by the sum of common stock and retained earnings.

Lastly, make two charts. First make a trend chart of the RI that you have calculated for the 10 years. Second, make a chart that contains all three of hte returns you calculated in the steps above.

REQUIRED:

a. Turn in your sheet with your calculation and graphs.

b. Comment on the trends you see. Specifically, compare the WACC to the different returns earned by the firm. What does this comparison tell you?