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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
I1-45.     Computing Return on Equity and Return on Assets    (Lo4)
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The following table contains financial statement information for astraZeneca, which is a global bio- pharmaceutical company focused on discovery, development, manufacturing and commercialization of medicines and is headquartered in london, uK.
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|
($ millions) |
total assets |
net income |
sales |
equity |
|
2010 . . . . . . . . . . |
$56,127 |
$8,106 |
$33,269 |
$23,410 |
|
2011 . . . . . . . . . . |
52,830 |
9,470 |
33,591 |
23,472 |
|
2012 . . . . . . . . . . |
53,534 |
6,405 |
27,973 |
23,952 |
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a.      Compute the return on equity (rOe) for 2011 and 2012. What trend, if any, is evident? how does AstraZeneca’s  rOe  compare  with  the  approximately  21.5%  median  rOe  for  companies  in  the Dow Jones industrial average for 2012?
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b.      Compute the return on assets (rOA) for 2011 and 2012. What trends, if any, are evident? how does AstraZeneca’s rOA compare with the approximate 6.7% median rOA for companies in the Dow Jones industrial average for 2012?
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c.      What factors might allow a company like AstraZeneca to reap above-average returns?
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