The following summary financial statistics were obtained from the 2015 and 2016 Otago Bay Marine Motors (OBMM) nual reports: EEE a. Use the profit margin and asset turnover to compute the 2015 ROA for OBMM. Now introduce the equity multiplier to find ROB b. Use the summary financial information to compute the 2016 ROA and ROE. Use the same procedures to calculate these measures as you did in part a c. On the basis of your calculations, describe how each of the three components (profit margin, asset turnover, and leverage) contributed to the change in OBMM's ROA and ROE between 2015 and 2016. Which component(s) contributed the most to the change in ROA? Which contributed the most to the change in ROE? d. Generally speaking, do you think that these changes are fundamentally healthy for the company? a. OBMM's 2015 ROA is% OBMM's 2015 ROE is 96 (Round to two decimal places.) b. OBMM's 2016 ROA is 96. (Round to two decimal places.) OBMM's 2016 ROE is | 1%. (Round to two decimal places.) (Round to two decimal places.) c. Which of the following statements best describes how each of the three components (profit margin, asset turnover, and leverage) contributed to the change in OBMM's ROA and ROE between 2015 and 2016? (Select the best choice below.) O A. O B. O C. ( D. Both ROA and ROE increased due to a sharp decrease in total assets, which increased the total asset turnover while reducing the equity multiplier The ROA declined through an increase in shareholders' equity, while the ROE declined mainly due to a decrease in net sales. The ROA declined through an increase in total assets, while the ROE increased mainly due to an increase in net sales Both ROA and ROE declined due to a sharp increase in total assets, which reduced the total asset turnover while increasing the equity multiplier d. Generally speaking, do you think that these changes are fundamentally healthy for the company? (Select the best choice below.) OA. OBMM appears fundamentally healthy due to the increased ROA and ROE from 2015 to 2016 O B. OBMM appears fundamentally healthy due to the increased net sales and net earnings from 2015 to 2016 O C. OBMM does not appear fundamentally healthy due to the decline in ROA and ROE from 2015 to 2016 D. OBMM does not appear fundamentally healthy due to the decline in the equity multiplier from 2015 to 2016 Data Table (Click on the icon located on the top-right corner of the data table below in order to copy its contents into a spreadsheet.) 2016 (S in millions) $263.5 $297.8 $38.4 S2136 2015 (S in millions) $176.3 $133.6 $20.7 $107.7 Sales revenue Total assets Net earnings Click to select your answer(s)
