Answer:
Cable Corporation Multi-Media Inc.
Net income $30,700 $115,000
Sales $336,000 $2,370,000
Total assets $485,000 $919,000
Total debt $229,000 $465,000
Stockholders' equity $256,000 $454,000
a-1. Compute return on stockholders’ equity for both firms.
ROE = net income / shareholders' equity
a-2. Which firm has the higher return?
b. Compute the following additional ratios for both firms.
Input your Net income/Sales
Net income/Total assets
Debt/Total asset
Sales/Total assets