Question

Save 5 Cable Corporation Net Income Sales Total assets Total debt Stockholders' equity MultiMedia ine $ 139,000 2,120,000 925,000 473,000 447.000 314,000 468,000 144.000 274,000 16.66 point eBook 6-1. Compute return on stockholders' equity for both firms. (Input your answers as a percent rounded to 2 decimal places.) Print References Cable Corporation Mus Media, Inc Return on Stockholders Equity 11 201 3110 --2. Which firm has the higher return? Cable Corporation • Multi Media Inc b. Compute the following additional ratios for both firms. (Input your Net Income/Sales, Net Income Total assets and Debt Total asset answers as a percent rounded to 2 decimal places. Round your Sales/Total assets answers to 2 decimal places)

Answer 1

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Working Data:

	Cable Corporation	Multi Media
Net Income	30700	139000
Sales	314000	2120000
Total Assets	468000	925000
Total Debt	194000	478000
Stockholder's Equity	274000	447000

a1) Return on Stockholder's Equity
Net Income / Stockholder's Equity	11.20%	31.10%
a2) Multi Media has highest return.
b) Ratios
Net Income/Sales	9.78%	6.56%
Net Income/Total Assets	6.56%	15.03%
Sales/Total Assets	67.09%	229.19%
Debt/Total Assets	41.45%	51.68%