Return on Equity in Presence of Large Treasury Stock Balance NJ Simpson Inc. reported the following equity accounts in its 2019 balance sheet. Stock prices for the past three year-ends of 2019, 2018, and 2017 are: $244.80, $196.96, and $136.34 respectively Shareholders' Equity (5 millions, expect par and shares) 2019 2018 2017 Common stock - par value 51 per share authored 70.000.000 Shares sued 40.000.000 shares) 540 $40 540 Additional din Capital 1.240 1.240 240 Accumulated other comprehensive income 108 196) (220 1.419 1340 1209 Stockholders en before treasurystok 2.807 2.524 226 Le common held in treasury 1.360.000 10 136.000 and 2.776) 1114 31 6802.155 161 525 167412149 The income statement for Simpson Inc. reports the following mins Cadencome 093218 Compute return on equity for 2019 and 2018, under the following assumptions. Traditional definition of equity With adding back treasury stock to equity. Using market value of equity instead of book value Round answers to one decimal place lex 0.2345 - 23.5%) Otcome 2013 2018 1119 ON 0 b. Which of these metrics do we believe best measures the company's return for the past two years? Select which statement is correct Traditional ROE is inflated by the small equity balance in the denominator. This version does not truly measure the company's performance. OROE with no treasury stock is inflated by the small equity balance in the demoniator as it assumes the company could sell the treasury stock and add the cash to assets. CROE using market value potentially overstates current period performance because the ratio includes the company's high stock price, which by definition Impounds future earnings. All of these statements are correct. Question 11 Answer saved Marked out of 7.00 P Rag question Return on Equity in Presence of Large Treasury Stock Balance NJ Simpson Inc. reported the following equity accounts in its 2019 balance sheet. Stock prices for the past three year-ends of 2019,2018, and 2017 are: $244.80, 5196.96, and $136.34, respectively Shareholders' Equity (5 millions, expect par and shares) 2019 2018 2017 Common stock - par value 51 per share authorized 70.000.000 shares issued 40.000.000 shares) Additional paid in capital 1.240 1.240 1.200 Accumulated other comprehensive income 196) 1220 Retained earnings 14191340 1.209 Stockholders' equity before treasury stock 2.807 2.524 2.200 Less.common stock held in treasury, at cost (15.360,000, 10.336,000 and 980,000 shares, respectively 2.776 11.346) 1114 Total shareholders' equity 31 680 2.155 Equity attributable to no controling interest 060 Equity attributable to company shareholders 525 5674 52.100 The income statement for NJ Simpson Inc. reports the following S millions 2019 2018 2017 Earnings attributable to company shareholders 5405 $301 $217 Consolidated net income 409 303 218 a. Compute return on equity for 2019 and 2018, under the following assumptions . Traditional definition of equity . With adding back treasury stock to equity . Using market value of equity instead of book value. Round answers to one decimal place (ex: 0.2345 23.5%) ROE computation 2010 2018 Traditional ON No treasury stock 0 ON Market value of equity 5 Round answers to one decimal place (ex: 0.2345 = 23.5%) ROE computation 2019 2018 Traditional 13.19% No treasury stock ON 0% Market value of equity OS ON b. Which of these metrics do we believe best measures the company's return for the past two years? Select which statement is correct Traditional ROE is inflated by the small equity balance in the denominator. This version does not truly measure the company's performance. GROE with no treasury stock is inflated by the small equity balance in the demoniator as it assumes the company could sell the treasury stock and add the cash to assets. ROE using market value potentially overstates current period performance because the ratio includes the company's high stock price, which by definition impounds future earnings. All of these statements are correct. Return on Equity in Presence of Large Treasury Stock Balance NJ Simpson Inc. reported the following equity accounts in its 2019 balance sheet. Stock prices for the past three year-ends of 2019, 2018, and 2017 are: $244.80, $196.96, and $136.34 respectively Shareholders' Equity (5 millions, expect par and shares) 2019 2018 2017 Common stock - par value 51 per share authored 70.000.000 Shares sued 40.000.000 shares) 540 $40 540 Additional din Capital 1.240 1.240 240 Accumulated other comprehensive income 108 196) (220 1.419 1340 1209 Stockholders en before treasurystok 2.807 2.524 226 Le common held in treasury 1.360.000 10 136.000 and 2.776) 1114 31 6802.155 161 525 167412149 The income statement for Simpson Inc. reports the following mins Cadencome 093218 Compute return on equity for 2019 and 2018, under the following assumptions. Traditional definition of equity With adding back treasury stock to equity. Using market value of equity instead of book value Round answers to one decimal place lex 0.2345 - 23.5%) Otcome 2013 2018 1119 ON 0 b. Which of these metrics do we believe best measures the company's return for the past two years? Select which statement is correct Traditional ROE is inflated by the small equity balance in the denominator. This version does not truly measure the company's performance. OROE with no treasury stock is inflated by the small equity balance in the demoniator as it assumes the company could sell the treasury stock and add the cash to assets. CROE using market value potentially overstates current period performance because the ratio includes the company's high stock price, which by definition Impounds future earnings. All of these statements are correct. Question 11 Answer saved Marked out of 7.00 P Rag question Return on Equity in Presence of Large Treasury Stock Balance NJ Simpson Inc. reported the following equity accounts in its 2019 balance sheet. Stock prices for the past three year-ends of 2019,2018, and 2017 are: $244.80, 5196.96, and $136.34, respectively Shareholders' Equity (5 millions, expect par and shares) 2019 2018 2017 Common stock - par value 51 per share authorized 70.000.000 shares issued 40.000.000 shares) Additional paid in capital 1.240 1.240 1.200 Accumulated other comprehensive income 196) 1220 Retained earnings 14191340 1.209 Stockholders' equity before treasury stock 2.807 2.524 2.200 Less.common stock held in treasury, at cost (15.360,000, 10.336,000 and 980,000 shares, respectively 2.776 11.346) 1114 Total shareholders' equity 31 680 2.155 Equity attributable to no controling interest 060 Equity attributable to company shareholders 525 5674 52.100 The income statement for NJ Simpson Inc. reports the following S millions 2019 2018 2017 Earnings attributable to company shareholders 5405 $301 $217 Consolidated net income 409 303 218 a. Compute return on equity for 2019 and 2018, under the following assumptions . Traditional definition of equity . With adding back treasury stock to equity . Using market value of equity instead of book value. Round answers to one decimal place (ex: 0.2345 23.5%) ROE computation 2010 2018 Traditional ON No treasury stock 0 ON Market value of equity 5 Round answers to one decimal place (ex: 0.2345 = 23.5%) ROE computation 2019 2018 Traditional 13.19% No treasury stock ON 0% Market value of equity OS ON b. Which of these metrics do we believe best measures the company's return for the past two years? Select which statement is correct Traditional ROE is inflated by the small equity balance in the denominator. This version does not truly measure the company's performance. GROE with no treasury stock is inflated by the small equity balance in the demoniator as it assumes the company could sell the treasury stock and add the cash to assets. ROE using market value potentially overstates current period performance because the ratio includes the company's high stock price, which by definition impounds future earnings. All of these statements are correct