Ratio values for three companies that are about the same size is below: Company 1 Company 2 Company 3 Profit margin 10% 15% 9% Asset turnover 1.0 0.5 0.8 Return on assets 10% 8% 7% Return on equity 12% 14% 8% All companies sell inventory at the same price In the blank box below, please provide the amount asked for (when entering amounts please do not use commas, negative signs or dollar signs or cents – please round your answer to the nearest dollar). Blank 1: The number of the company that has the most debt and controls its expenses the best.
Added by Tasha E.
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Return on equity (ROE) = Return on assets (ROA) × Equity multiplier, so Equity multiplier = ROE / ROA. Profit margin (net income / sales) measures expense control when selling price is the same. Show more…
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Comparative data on three companies in the same service industry are given below: Company A B C Sales $600,000 $500,000 ? Net operating income $84,000 $70,000 ? Average operating assets $300,000 ? $1,000,000 Margin ? ? 3.5% Turnover ? ? 2 ROI ? 7% ? Required: 1. What advantages are there to breaking down the ROI computation into two separate elements, margin and turnover? 2. Fill in the missing information above, and comment on the relative performance of the three companies in as much detail as the data permit. Make specific recommendations about how to improve the ROI.
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