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Compare Operating Characteristics Across Industries Following are selected income statement and balance sheet data for companies in different industries. $ millions Sales Cost of Goods

Compare Operating Characteristics Across Industries
Following are selected income statement and balance sheet data for companies in different industries.
$ millions Sales Cost of Goods Sold Net Income Assets Liabilities Stockholders Equity
Target $109,120 $82,229 $2,780 $53,335 $42,103 $11,232
Nike 46,71025,2316,04640,32125,04015,281
Harley-Davidson 5,7553,62173911,4928,5862,903
Abbott Laboratories 43,65319,1426,93374,43837,53336,686
Required
a. Compute the gross profit/sales, net income/sales, net income/stockholders' equity, and liabilities/stockholders' equity ratios for each company.
$ millions Numerator -: Denominator = Gross Profit/Sales
Target Answer 1
-: Answer 2
=
Nike Answer 3
-: Answer 4
=
Harley-Davidson Answer 5
-: Answer 6
=
Abbott Laboratories Answer 7
-: Answer 8
=
$ millions Numerator -: Denominator Net income/Sales
Target Answer 9
-: Answer 10
=
Nike Answer 11
-: Answer 12
=
Harley-Davidson Answer 13
-: Answer 14
=
Abbott Laboratories Answer 15
-: Answer 16
=
$ millions Numerator -: Denominator = Net income/Stockholders' equity
Target Answer 17
-: Answer 18
=
Nike Answer 19
-: Answer 20
=
Harley-Davidson Answer 21
-: Answer 22
=
Abbott Laboratories Answer 23
-: Answer 24
=
$ millions Numerator -: Denominator = Liabilities/Stockholders' equity
Target Answer 25
-: Answer 26
=
Nike Answer 27
-: Answer 28
=
Harley-Davidson Answer 29
-: Answer 30
=
Abbott Laboratories Answer 31
-: Answer 32
=
b. Profit margin (Net income / Sales) is a function of both gross profit margin and expense control. Abbott Labs' profit margin is the Answer 33
of the companies in this sample, due to its Answer 34
gross profit margin.
c. Which company reports the highest ratio of net income to equity?
Answer 35
enjoys the highest return on equity (measured as net income to equity), followed by Answer 36
whose equity is relatively low due to recent stock buybacks. Stock buybacks Answer 37
equity.
d. Which company has financed itself with the highest percentage of liabilities to equity?
Answer 38
has the highest proportion of debt in its capital structure at least in part because the company has Answer 39
common stock over the past five years.

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