FREE Trial
Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The results of the analysis of the financial statements of PT ABC and PT XYZ show the following ratios: PT ABC PT XYZ Sales/ Total

The results of the analysis of the financial statements of PT ABC and PT XYZ show the following ratios:

PT ABC

PT XYZ

Sales/ Total Assets

1.5

2.0

Net Income to Total Assets (ROA)

3%

4%

Net Income to Total Equity (ROE)

5%

5%

Questions

1. Calculate the Profit Margin (Net Income / Sales) and Debt to Equity Ratio of the two companies!

2. If you are a potential investor who is risk averse, which company will you choose to invest in? Explain!

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Managerial Finance

Managerial Finance

Authors: Alan Parkinson

1st Edition

0750618264, 978-0750618267

More Books

Students also viewed these Finance questions

Question

★★★★★
The A cannot decay by the following reactions. What conservation law is violated in each of the reactions? (a) 0 n + (b) 0 p + K (c) 0 + +

Answered: 1 week ago

Question

★★★★★
(Appendixes) INVENTORY TURNOVER. A recent annual report for The Limited shows cost of goods sold for the year of approximately $5,286 million and average inventory of approximately $769 million...

Answered: 1 week ago

Question

★★★★★
1. Establishing a Sense of Urgency Examining the market and competitive realities Identifying and discussing crises, potential crises, or major opportunities

Answered: 1 week ago

Question

★★★★★
Happy Feet buys hiking socks for $6 a pair and sells them for $10. Management budgets monthly fixed costs of $12,000 for the relevant range of 0 (zero) to 12,000 pairs. Required Consider each of the...

Answered: 1 week ago

Question

★★★★★
The results of the analysis of the financial statements of PT ABC and PT XYZ show the following ratios: PT ABC PT XYZ Sales/ Total Assets 1.5 2.0 Net Income to Total Assets (ROA) 3% 4% Net Income to...

Answered: 1 week ago

Question

★★★★★
The management of the Auto Parts Division of the Santana Corporation receives a bonus if the division's income achieves a specific target. For 2021, the target will be achieved by a wide margin. Mary...

Answered: 1 week ago

Question

★★★★★
Miller & Co., CPAs is considering entering into a cooperative arrangement with T Corporation, an audit client. In which instance would the arrangement be permissible under the AICPA rules? A.) The...

Answered: 1 week ago

Question

★★★★★
Scenario: You rent a movie from Red Box and place the DV DVD but are unable to. What kind of memory storage is the ROM O Hard Drive or other External Storage O Cache O RAM

Answered: 1 week ago

Question

★★★★★
8. Wong Computer Corporation had the following opening account balances at the end of April: Cash $5,000; Accounts Receivable $6,000; Accounts Payable $2,000; Common Shares $5,000; and Retained...

Answered: 1 week ago

Question

★★★★★
C. Find the answers to parts a and b above assuming that the rate is 7%. 13. (FV annuity) Michael is considering his consumption habits, trying to figure out how to save money. He realizes that he...

Answered: 1 week ago

Question

★★★★★
The DuPont Equation A DuPont analysis is conducted using the DuPont equation, which helps to identify and analyze three important factors that drive a company's ROE. According to the equation, which...

Answered: 1 week ago

Previous Question Next Question