Question

Problem 4 Shareholder Return

(in millions of dollars)	Merck	Eli Lilly
Sales	44,033	23,113
Net Income	4,404	4,684
Total Assets	105,645	35,249
Total Equity	52,326	17,640
Dividends	5,132	2,103
(in dollars)	-	-
Beginning Stock Price	41.34	49.51
Ending Stock Price	50.05	51.00
Dividends per Share	1.73	1.88
Earnings per Share	1.49	4.32

4.3 Under what conditions would the return on assets and return on equity ratio be equal (4 points)?

		When the company's assets are over $1.2 Million
		If there are no liabilities
		If there is no equity
		If there are no assets

Answer 1

Return on assets and return on equity ratio be equal If there are no liabilities

Return on assets is calculated as Net income divided by Average total assets

Return on equity is calculated as Net income divided by Average equity

If there are no liabilities, Total assets will equal total equity and return on assets and return on equity ratio will be equal

Option B is correct