Computing Return on Equity and Return on Assets The following table contains financial statment information for Walmart...

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Accounting

Computing Return on Equity and Return on Assets
The following table contains financial statment information forWalmart Stores Inc.
$ millions Total Assets Net Income Sales Equity
2015 199,581 14,694 478,614 80,546
2014 203,490 16,363 482,229 81,394
2013 204,751 16,022 473,076 76,255
Questions
A. Compute the return on euqity (ROE) for 2014 and 2015. Whattrend, if any, is evident? How does Wal-Mart's ROE compare withapproximately 18.9% ROE for companies in the Dow Jones INdustrialaverage of 2015?
B. Compute the return on assets for 2014 and 2015. What trends,if any, are evident? How does Wal-Mart's ROA compare with theapproximate 7.1% median ROA for companies in the DOW JonesIndustrial average for 2015?
C. What factors might allow a company like Walmart to reapabove-average returns?

Answer & Explanation Solved by verified expert

3.8 Ratings (739 Votes)

A Return on Equity Net Income Average Equity 2014 16363 78825 100 2076 2015 14694 80970 100 1815 The ROE has declined from 2076 in 2014 to 1815 in 2015 See Answer

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$ millions	Total Assets	Net Income	Sales	Equity
2015	199,581	14,694	478,614	80,546
2014	203,490	16,363	482,229	81,394
2013	204,751	16,022	473,076	76,255