Question
An abstracted income statemen and balance sheet information for Cabella is as follows for a recent year in millions. Compute profitability and solvency ratios and
An abstracted income statemen and balance sheet information for Cabella is as follows for a recent year in millions. Compute profitability and solvency ratios and comment on the performance of an entity using acceptable standards of profitability and solvency performance. Income statement data: Other income/expenses $54 Operating profit before other expenses and interest 677 Interest expense (180) Income before income taxes $551 Income tax expense 93 Net income $458 Balance sheet data: Total liabilities $7,398 Total stockholders equity 1,585 Total liabilities and stockholders equity $8,983 Other data: average liabilities, average stockholders equity and average total assets Average total assets $7,199 Average total liabilities 2,132 Average total stockholders equity 5,067 A. Compute the following ratios: 1. Return on stockholders equity. 2. Return on total assets. 3. Times interest earned 4. Ratio of total liabilities to stockholders equity B. Based on the calculation comment on the performance of the entitys using acceptable standards of profitability and solvency performance
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