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Problem 8-5. reproduced PROBLEM 8-5 Din puting and dan Return en Equity Selected financial statement data from Texas Telecom, Inc., for Years 5 and 9
Problem 8-5. reproduced PROBLEM 8-5 Din puting and dan Return en Equity Selected financial statement data from Texas Telecom, Inc., for Years 5 and 9 are below (5 millions): Year 5 Year 9 Income Statement Data Revenues. Operating income. Interest expense. Pretax income Income taxes Net income. Balance Sheet Data Long-term operating assets. Working capital Total liabilities Total shareholders' equity $542 35 7 28 14 14 $979 68 0 68 34 34 $ 52 123 50 125 $ 63 157 0 220 CHECK (a) Yt5 RNOA - 100% Required: a. Calculate return on common equity and disaggregate ROCE for Years 5 and 9 using end-of-year values for com- putations requiring an average (assume fixed assets and working capital are operating and a 50% tax rate b. Comment on Texas Telecom's use of financial leverage
Problem 8-5.
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