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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
a. Calculate the debt ratio and the return on assets using the year-end information for each of the following six separate companies ($ thousands).
|
Case |
Assets |
Liabilities |
Average Assets |
Net Income |
|
Company 1 |
$147,000 |
$56,000 |
$200,000 |
$21,000 |
|
Company 2 |
104,500 |
51,500 |
70,000 |
12,000 |
|
Company 3 |
90,500 |
12,000 |
100,000 |
20,000 |
|
Company 4 |
92,000 |
31,000 |
40,000 |
7,500 |
|
Company 5 |
64,000 |
47,000 |
40,000 |
3,800 |
|
Company 6 |
32,500 |
26,500 |
50,000 |
660 |
b. Of the six companies, which business relies most heavily on creditor financing?
c. Of the six companies, which business relies most heavily on equity financing?
d. Which two companies indicate the greatest risk?
e. Which two companies earn the highest return on assets?
f. Which one company would investors likely prefer based on the risk–return relation?
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