5. [Disaggregation of ROE] Disaggregate the 2002 return on equity of Brown Company using the three-component and five- component models. 6. [Operating and financial leverage: effects of growth]

a. Estimate Brown Company's fixed and variable costs.

b. Isumate Brown Company's operating. financial, and total leverage effects for 2001 and 2002

c. Discuss how the company's rapid growth in 2002 may have distorted the estimates calculated in parts a and

b. (Problems 4-7 and 4-8 are based on the common-size statements presented in Exhibit 4P-3.) 7. [Common-size statements ratios] Using the commor-size statements of Company in Exhibit 4P-3, calculate the follow- ing ratios (i) Inventory turnover (ii) Receivable turnover (iii) Length of operating cycle (iv) Length of cash cycle (v) Fixed asset turnover ratio (vi) Cash ratio (vii) Quick ratio (viii) Current ratio (ix) Debt to equity (x) Interest coverage (xi) EBIT/sales (xii) Sales assets (xiii) EB11 assets (xiv) HT/assets