Please answer P2.5 (first pic) and P.2.9 (second and third pic)

P25 Samsonite Corporation: Review the time-series of various financial leverage and coverage ratios for Sam- sonite Corporation in Exhibit P2.5. (Samsonite designs, develops, manufactures, and sells luggage and travel related consumer products.) a Discuss the change in Samsonite's financial leverage and coverage ratios over the time-series. b. Using its financial leverage and coverage ratios, discuss what you know about its common equity. C. Which is larger interest expense or preferred stock dividends for each year in the time series (Assume that an income tax rate of zero was used to measure the financial ratios.) Year 9 Year 7 0.9 EXHIBIT P2.5 Financial Leverage and Coverage Ratios for Samsonite Corporation Samsonite Corporation Year 1 Year 2 Year 3 Year 4 Year 5 Total debt to total assets ........... 0.5 0.5 0.3 0.8 0.8 Preferred stock to total assets..... 0.0 0.0 0.0 0.3 0.4 Total debt to common equity. 12.7 10.8 0.9 NMF NMF Preferred stock to common equity........ 0.0 0.0 NMF NMF EBIT coverage (interest only) ......... 3.6 0.5 1.1 EBIT coverage (interest + preferred stock dividends)..... 3.6 0.4 0.7 Year 6 0.8 0.4 NMF NMF 1.2 0.5 Year 8 0.7 0.6 NMF NMF 1.5 NMF NMF 0.7 0.3 NMF NMF 1.7 -0.2 0.7 0.9 0.7 0.5 0.8 1.0 "NMF - not a meaningful figure P29 Main Street Restaurant Group: A young analyst was asked to measure the return on assets and return on equity for the operations of the Main Street Restaurant Group by using the abbreviated balance sheets and income statements that appear in Exhibit P2.9. (The company operates TGI Friday's and other restaurants.) Based on this information, the analyst calculated the rates of return using the following formulas Return on Assets = Net Income + (1 - Average Tax Rate) x Interest Expense Average Total Assets Return on Equity Net Income Average Common Equity Chapter 21 Financial Statement Analysis 77 Comment on the formulas the analyst used to measure the rates of return on the company's operations shown in the exhibit Using the information in the exhibit correctly calculate the return on assets and return on equity for the company's operations, for each year for which you have data available Calculate the components of the correctly calculated return on assets and return on equity for each year for which you have data available, c. Year & EXHIBIT P2.9 Abbreviated Balance Sheets and Income Statements for the Main Street Restaurant Group Main Street Restaurant Group Balance Sheet (Abbreviated) Year 1 Year 2 Year 3 Year 4 Years Current assets ....... ....................... $ 8.56 $13.20 $ 15.82 $12.55 $ 9.83 Plant, property & equip (net). .... 58.00 63 85 6523 71.27 68.13 19.96 31.20 31,42 28.58 28.25 Total assets.... $ 86.52 $108.25 $112.47 $112.40 $105.21 10.04 66.45 26.69 $103.18 Other assets..... $ 25.22 20.89 $23.81 47.23 $29.74 42.23 1.22 $ 59.14 Total current abilities.. Long term debt. Other liabilities Total liabilities Common stock..... Retained earnings ... Treasury stock. Common equity (total)....... Liabilities and shareholders' equity.. $44.20 -16.82 $ 72.26 $ 53.66 -13.45 $ 67.76 $ 53.63 -13.14 0.00 $40.49 $108.25 $ 27.58 52.00 3.21 $ 82.79 $ 53.94 -24.33 0.00 $29.81 $112.40 $ 25,80 47.87 2.44 $77.11 $ 54,95 -25.85 0.00 $29.10 $106.21 0.00 $ 73.89 $ 54.95 -25.66 0.00 $ 20.29 $103.18 $ 27.38 $ 40.21 $112.47 $ 86.52 Debt in current liabaties.... Average income tax rate...... Closing stock price........ Common dividends. . $ 1.83 35.0% $ 3.25 $ 0.00 $ 2.01 35.0% 3.03 $ 0.00 $ 3.01 35.0% $ 4.94 $ 0.00 $ 3.50 35.0% $ 2.12 $ 0.00 $ 3.82 35.0% $ 2.86 $ 0.00 $ 3.85 35.0% $ 1.60 $ 0.00 Main Street Restaurant Group Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Income Statement (Abbreviated) Sales (net)........ Cast of goods sold... $141.16 121.29 $ 19.87 9.93 5.65 4.29 $187.15 161.65 $25.50 11.15 8.49 $214.26 184.86 $29.40 11.20 9.68 $227.49 200.79 $26.70 10.08 $224.75 199.75 $ 25.00 9.52 $229.15 194,79 $ 34,36 12.39 8.36 $ 13,61 3.90 0.00 -7.99 Gross profit.......... . . Selling, general, & admin expenses.. Depreciation, depletion, & amortiz. Operating income............. Interest expense... Minority interest in income... Non-operating income (expenses). $ $ $ 7.63 $ 5,85 3.62 8.52 3.83 0.00 6.61 3.97 0.00 0.00 0.00 -2.08 -1.69 -3.45 $ $ 1.69 3.93 1.38 $ $ $ $ 0.95 1.20 0.42 Pretax income ........ Income taxes .... 1.24 0.43 1.72 0.60 1.03 0.36 $ $ $ $ 0.67 $ 0.62 0.78 -0.17 2.55 -0.02 0.81 0.00 1.12 0.00 Income before extraordinary items & discontinued oper....... Extraordinary items and discontinued operations ............ ...... $ $ 0.61 2.53 $ 0.81 $ 1.12 $ Net Income... $ 0.67 0.62