Business Applications Cases Performing ratio analysis using real-world data
The following data were taken from yahoo, Inc’s 2008 annual report. All dollar amounts are in millions.
| Fiscal Years Ending | |
| December 31, 2008 | December 31,2007 |
Total assets | $13,689.8 | $12,229.7 |
Total liabilities |
|
|
Stockholders’ equity | 11,250.9 | 9,532.8 |
Net income | 424.3 | 660.0 |
Required
a. For each year, compute Yahoo’s debt to assets ratio, return on assets ratio, and return on equity ratio. You will need to compute total liabilities.
b. Did the company’s level of financial risk increase or decrease from 2007 to 2008?
c. In which year did the company appear to manage its assets most efficiently?
d. Do the above ratios support the concept of financial leverage? Explain.
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