Computing Return on Equity and Return on Assets

The following table contains financial statement information for Walmart Inc.

$ millionsTotal AssetsNet IncomeSalesEquity2018$247,803$8,137$408,263$81,9202017231,11012,032396,60987,9922016224,67216,644385,05487,912

a. Compute return on equity (ROE) for the two recent years. b. Compute return on assets (ROA) for the two recent years. c. Compute profit margin (PM) for the two recent years. d. Compute asset turnover (AT) for the two recent years.

• Round ROE, ROA and PM to one decimal place (example: 0.2345 = 23.5%).
• Round AT to two decimal places (example: 1.35).

20182017ROEAnswerAnswerROAAnswerAnswerPMAnswerAnswerATAnswerAnswer

e. Which of the following best explains the change in ROA during 2018?

The companys profitability weakened considerably.

The companys asset productivity weakened considerably.

The company had higher sales in 2018.

The company had higher assets 2018.