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Consider the following financial data for Berkshire Hathaway Inc. and JPMorgan Chase & Co. for the fiscal year 2023: ($ millions) Berkshire Hathaway Inc. JPMorgan

Consider the following financial data for Berkshire Hathaway Inc. and JPMorgan Chase & Co. for the fiscal year 2023:

($ millions)

Berkshire Hathaway Inc.

JPMorgan Chase & Co.

Net sales

$278,094

$133,892

Cost of sales

185,436

73,948

Gross profit

92,658

59,944

Operating expenses:



Selling, general, and administrative

42,183

23,109

Research and development

6,982

5,746

Operating income

43,493

31,089

Interest and other (income) expense

7,421

4,210

Interest and investment income

(2,311)

(1,865)

Earnings before provision for income taxes

38,383

28,744

Provision for income taxes

9,596

6,898

Net earnings

$28,787

$21,846

Required: a. Compute the return on equity (ROE), return on assets (ROA), and return on financial leverage (ROFL) for Berkshire Hathaway Inc. and JPMorgan Chase & Co. Assume a tax rate of 25%. b. Break down the ROA into profit margin (PM) and asset turnover (AT) for both companies. Identify the primary drivers of their ROA. c. Assess the trend in net earnings over the past five years. What does it indicate about the overall financial health of the companies? d. Evaluate the debt-to-equity ratio for Berkshire Hathaway Inc. and JPMorgan Chase & Co. What does it imply about their financial risk and leverage? e. Compare the research and development (R&D) expenses as a percentage of sales for Berkshire Hathaway Inc. and JPMorgan Chase & Co. What can be inferred about their investment in innovation?

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