Q1: Below are selected ratios for XYZ. Use this information answer the following questions. Sarah Mat 1. Net operating asset turnover 2. Inventory turnover 3. Accounts receivable turnover 4. Fixed assets turnover 5. Net operating profit margin 6. Net operating assets/equity 7 EBIT/revenues 8. Gross margin 9. Income tax rate Year 1 1.4 5.6 12.1 1.3 4.5% 2.10 8.9% 20.1% 35% Year 2 1.31 5.0 11.9 1.29 4.6% 1.98 8.6% 19.9% 35% Year 3 1.25 4.6 12.1 1.29 4.8% 1.77 8.6% 19.8% 35% a. Calculate return on net operating assets for all three years. Identify reasons for any changes. b. Calculate return on equity for all three years. Comment on changes. Q2: Indicate the effect of the following transactions on: i. Return on net operating Assets (RNOA) ii. Return on common stockholders' equity (ROCE) iii. Earnings per share (basic) Consider each transaction independently and explain your answer. Assume that ROCE is higher than RNOA Company issues more preferred stock and uses proceeds to reduce accounts payable Company has a stock split Company converts to just-in-time inventory system (JIT). This allows them to hold half the levels of inventory for the same amount of sales (sales themselves are not increased by this change to IT DELL Q1: Below are selected ratios for XYZ. Use this information answer the following questions. Sarah Mat 1. Net operating asset turnover 2. Inventory turnover 3. Accounts receivable turnover 4. Fixed assets turnover 5. Net operating profit margin 6. Net operating assets/equity 7 EBIT/revenues 8. Gross margin 9. Income tax rate Year 1 1.4 5.6 12.1 1.3 4.5% 2.10 8.9% 20.1% 35% Year 2 1.31 5.0 11.9 1.29 4.6% 1.98 8.6% 19.9% 35% Year 3 1.25 4.6 12.1 1.29 4.8% 1.77 8.6% 19.8% 35% a. Calculate return on net operating assets for all three years. Identify reasons for any changes. b. Calculate return on equity for all three years. Comment on changes. Q2: Indicate the effect of the following transactions on: i. Return on net operating Assets (RNOA) ii. Return on common stockholders' equity (ROCE) iii. Earnings per share (basic) Consider each transaction independently and explain your answer. Assume that ROCE is higher than RNOA Company issues more preferred stock and uses proceeds to reduce accounts payable Company has a stock split Company converts to just-in-time inventory system (JIT). This allows them to hold half the levels of inventory for the same amount of sales (sales themselves are not increased by this change to IT DELL