See Table $2\mathrm{.}5$ LOADING... showing financial statement data and stock price data for Mydeco Corp.

a$.$ Compute$$ Mydeco's ROE each year from $2015$ to $2019.$

b$.$ Compute$$ Mydeco's ROA each year from$2015$ to $2019.$

c$.$ Which return is more$$ volatile? Why?

Question content area bottom

Part $1$

a$.$ Compute$$ Mydeco's PE ratio each year from $2015$ to $2019.$

Calculate the ROE for $2015$dash$2019$below:$($Round dollar amounts to one decimal place and ROE to two decimal$$ places.$)$

Year

$2015$

Net Income

$

Stockholders' Equity

$

ROE

$\%$

Part $2$

$($Round dollar amounts to one decimal place and ROE to two decimal$$ places.$)$

Year

$2016$

Net Income

$

Stockholders' Equity

$

ROE

$\%$

Part $3$

$($Round dollar amounts to one decimal place and ROE to two decimal$$ places.$)$

Year

$2017$

Net Income

$

Stockholders' Equity

$

ROE

$\%$

Part $4$

$($Round dollar amounts to one decimal place and ROE to two decimal$$ places.$)$

Year

$2018$

Net Income

$

Stockholders' Equity

$

ROE

$\%$

Part $5$

$($Round dollar amounts to one decimal place and ROE to two decimal$$ places.$)$

Year

$2019$

Net Income

$

Stockholders' Equity

$

ROE

Part $6$

b$.$ Compute$$ Mydeco's ROA each year from $2015$ to $2019.$

The ROA for $2015$dash$2019$is:$($Round dollar amounts to one decimal place and ROA to two decimal$$ places.$)$

Year

$2015$

Net Income $+$ Interest Exp.

$

Book Value of Assets

$

ROA

$\%$

Part $7$

$($Round dollar amounts to one decimal place and ROA to two decimal$$ places.$)$

Year

$2016$

Net Income $+$ Interest Exp.

$

Book Value of Assets

$

ROA

$\%$

Part $8$

$($Round dollar amounts to one decimal place and ROA to two decimal$$ places.$)$

Year

$2017$

Net Income $+$ Interest Exp.

$

Book Value of Assets

$

ROA

$\%$

Part $9$

$($Round dollar amounts to one decimal place and ROA to two decimal$$ places.$)$

Year

$2018$

Net Income $+$ Interest Exp.

$

Book Value of Assets

$

ROA

$\%$

Part $10$

$($Round dollar amounts to one decimal place and ROA to two decimal$$ places.$)$

Year

$2019$

Net Income $+$ Interest Exp.

$

Book Value of Assets

$

ROA

$\%$

Part $11$

c$.$ Which return is more$$ volatile? Why?$($Select from the$$ drop$-$down menus.$)$

$$

ROA

ROE

is more volatile.$$ Mydeco's debt level causes a large portion of EBIT to go to interest expense. This magnifies the volatility of earnings left over for shareholders through net income.

$$

ROE

ROA

adjusts net income by the interest$$ expense, and thus is less sensitive to leverage.Income Statement $20152016201720182019$

Revenue $404\mathrm{.}3363\mathrm{.}8424\mathrm{.}6510\mathrm{.}7604\mathrm{.}1$

Cost of Goods Sold $(188\mathrm{.}3)(173\mathrm{.}8)(206\mathrm{.}2)(246\mathrm{.}8)(293\mathrm{.}4)$

Gross Profit $216\mathrm{.}0190\mathrm{.}0218\mathrm{.}4263\mathrm{.}9310\mathrm{.}7$

Sales and Marketing $(66\mathrm{.}7)(66\mathrm{.}4)(82\mathrm{.}8)(102\mathrm{.}1)(120\mathrm{.}8)$

Administration $(60\mathrm{.}6)(59\mathrm{.}1)(59\mathrm{.}4)(66\mathrm{.}4)(78\mathrm{.}5)$

Depreciation & Amortization $(27\mathrm{.}3)(27\mathrm{.}0)(34\mathrm{.}3)(38\mathrm{.}4)(38\mathrm{.}6)$

EBIT $61\mathrm{.}437\mathrm{.}541\mathrm{.}957\mathrm{.}072\mathrm{.}8$

Interest Income $($Expense$)(33\mathrm{.}7)(32\mathrm{.}9)(32\mathrm{.}2)(37\mathrm{.}4)(39\mathrm{.}4)$

Pretax Income $27\mathrm{.}74\mathrm{.}69\mathrm{.}719\mathrm{.}633\mathrm{.}4$

Income Tax $(9\mathrm{.}7)(1\mathrm{.}6)(3\mathrm{.}4)(6\mathrm{.}9)(11\mathrm{.}7)$

Net Income $18\mathrm{.}03\mathrm{.}06\mathrm{.}312\mathrm{.}721\mathrm{.}7$

Shares Outstanding $($millions$)55\mathrm{.}055\mathrm{.}055\mathrm{.}055\mathrm{.}055\mathrm{.}0$

Earnings per Share $$0\mathrm{.}33$ $$0\mathrm{.}05$ $$0\mathrm{.}11$ $$0\mathrm{.}23$ $$0\mathrm{.}39$

Balance Sheet $20152016201720182019$

Assets

Cash $48\mathrm{.}868\mathrm{.}986\mathrm{.}377\mathrm{.}585\mathrm{.}0$

Accounts Receivable $88\mathrm{.}669\mathrm{.}869\mathrm{.}876\mathrm{.}986\mathrm{.}1$

Inventory $33\mathrm{.}730\mathrm{.}928\mathrm{.}431\mathrm{.}735\mathrm{.}3$

Total Current Assets $171\mathrm{.}1169\mathrm{.}6184\mathrm{.}5186\mathrm{.}1206\mathrm{.}4$

Net Property, Plant & Equip. $245\mathrm{.}3243\mathrm{.}3309\mathrm{.}0345\mathrm{.}6347\mathrm{.}0$

Goodwill & Intangibles $361\mathrm{.}7361\mathrm{.}7361\mathrm{.}7361\mathrm{.}7361\mathrm{.}7$

Total Assets $778\mathrm{.}1774\mathrm{.}6855\mathrm{.}2893\mathrm{.}4915\mathrm{.}1$

Liabilities & Stockholders' Equity

Accounts Payable $18\mathrm{.}717\mathrm{.}922\mathrm{.}026\mathrm{.}831\mathrm{.}7$

Accrued Compensation $6\mathrm{.}76\mathrm{.}47\mathrm{.}08\mathrm{.}19\mathrm{.}7$

Total Current Liabilities $25\mathrm{.}424\mathrm{.}329\mathrm{.}034\mathrm{.}941\mathrm{.}4$

Long$-$term Debt $500\mathrm{.}0500\mathrm{.}0575\mathrm{.}0600\mathrm{.}0600\mathrm{.}0$

Total Liabilities $525\mathrm{.}4524\mathrm{.}3604\mathrm{.}0634\mathrm{.}9641\mathrm{.}4$

Stockholders' Equity $252\mathrm{.}7250\mathrm{.}3251\mathrm{.}2258\mathrm{.}5273\mathrm{.}7$

Total Liabilities & Stockholders' Equity $778\mathrm{.}1774\mathrm{.}6855\mathrm{.}2893\mathrm{.}4915\mathrm{.}1$

Statement of Cash Flows $20152016201720182019$

Net Income $18\mathrm{.}03\mathrm{.}06\mathrm{.}312\mathrm{.}721\mathrm{.}7$

Depreciation & Amortization $27\mathrm{.}327\mathrm{.}034\mathrm{.}338\mathrm{.}438\mathrm{.}6$

Chg$.$ in Accounts Receivable $3\mathrm{.}918\mathrm{.}80\mathrm{.}0(7\mathrm{.}1)(9\mathrm{.}2)$

Chg$.$ in Inventory $(2\mathrm{.}9)2\mathrm{.}82\mathrm{.}5(3\mathrm{.}3)(3\mathrm{.}6)$

Chg$.$ in Payables & Accrued Comp. $2\mathrm{.}2(1\mathrm{.}1)4\mathrm{.}75\mathrm{.}96\mathrm{.}5$

Cash from Operations