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Hello, please find the attachment and see my questions. Thank you. Please explain your solution and point of view. 1. Exhibit 7.15 presents the income
Hello, please find the attachment and see my questions. Thank you.
Please explain your solution and point of view. 1. Exhibit 7.15 presents the income statement and balance sheet for Companies A, B, and C. Compute each company's return on assets, return on equity, and return on invested capital. Based on the three ratios, which company has the best operating performance? (1 page - Times new roman - 12 Font size) 2. Why does the return on assets differ between Company A and Company B? Why do companies with equity investments tend to have a lower return on assets than companies with only core operations? (1 page - Times new roman - 12 Font size) Ratio Analysis: Consolidated Financial Statements Company A Company B Operating profit 100 100 Interest Earnings before taxes 100 100 Taxes Net Income Balance Sheet Inventory Property and equipment Equity Investment Total Assets Accounts Payable Debt Equity Liabilities and equity ($ Million) Company C 100 (20) 80 (25) 75 (25) 75 (20) 60 125 125 125 400 400 400 525 50 575 525 50 475 525 50 525 575 50 200 275 525Step by Step Solution
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