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| Teaching Since: | May 2017 |
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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
4.14   RELATING ROA AND ROCE. Valero Energy, a petroleum company, reported net income of $1,803.8 on revenues of $54,618.6 for Year 4. Interest expense totaled $359.7, and preferred dividends totaled $12.5. Average total assets for Year 4 were $17,527.9. The income tax rate is 35 percent. Average preferred shareholders’ equity totaled $204.3, and average common shareholders’ equity totaled $6,562.3. All amounts are in millions.
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a.   Compute the rate of ROA. Disaggregate ROA into profit margin for ROA and assets turnover components.
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b.  Compute the rate of ROCE. Disaggregate ROCE into profit margin for ROCE, assets turnover, and capital leverage ratio components.
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c.   Calculate the amount of net income to common shareholders derived from the excess return on creditors’ capital, the excess return on preferred shareholders’ capi- tal, and the return on common shareholders’ capital.
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