Interpreting results from the Du Pont system of analysis (LO3) Assume the following data for COSTCO and MANNYS Inc.

COSTCO MANNYS Inc.

Net income................................. $ 31,200 $ 140,000

Sales........................................... 317,000 2,700,000

Total assets................................. 402,000 965,000

Total debt................................... 163,000 542,000

Stockholders equity.................... 239,000 423,000

A. Compute the return on stockholders equity for both firms using ratio 3a. Which firm has the higher return?

b.Compute the following additional ratios for both firms:

Net income/Sales

Net income/Total assets

Sales/Total assets

Debt/Total assets

c. Discuss the factors from part b that added or detracted from one firm having a higher return on stockholders equity than the other firm as computed in part a.