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Argosy University/ Phoniex University/
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Phoniex University
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I1-45. Computing Return on Equity and Return on Assets (Lo4)
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.
|
($ 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 |
required
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?
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?
c. What factors might allow a company like AstraZeneca to reap above-average returns?
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