Question

ii) Please provide sufficient interpretations of the ratios and explain their change (or no change) from the year before, in a 1-2 paragraphs. If there's anything unusual or notable, please explain. Please be cautious about the signs on financial statement figures, especially on the income and cash flow statement. Some companies choose to report expense items as negative numbers because they get subtracted from the revenue to obtain the net income. When calculating the ratios, use your judgement to adjust their signs appropriately.

Please provide an interpretation based of off these Texas Instrument’s Profitability Ratios in 2017-2018.

Answer 1

The increase in profitability ratios from 2017 to 2018 represents an overall increase in the profitability of the company.

Return on Equity = Net Income/Total Equity.
Return on asset = Net Income/Total Assets.

The Net Income has increased. It is mainly due to an increase in the profitability margin increase from 0.2641 to 0.3535 from 2017 to 2018.

It shows that the capital budgeting of the company has improved and there is a better capital structure in place which increases profitability.

It shows an overall good sign.