Consider the following financial information for the companies below. Assume all assets are used solely...
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Accounting
Consider the following financial information for the companies below. Assume all assets are used solely for operations and all liabilities to be interest-bearing.
Wayne Enterprises ($)
Luthor Corp ($)
Total Assets
15,000,000
10,000,000
Total Equity
10,000,000
5,000,000
Interest Expense
280,000
500,000
Net Income
850,000
1,200,000
Revenue
8,200,00
14,185,000
Required: Calculate the ratios for each company using the template provided in the next two pages. Decompose the ROE into its individual components using both the traditional and alternative approaches covered in weeks 4 & 5 of lectures. Ignore tax effects.
Consider the following financial information for the companies below. Assume all assets are used solely for operations and all liabilities to be interest-bearing.
| Wayne Enterprises ($) | Luthor Corp ($) |
Total Assets | 15,000,000 | 10,000,000 |
Total Equity | 10,000,000 | 5,000,000 |
Interest Expense | 280,000 | 500,000 |
Net Income | 850,000 | 1,200,000 |
Revenue | 8,200,00 | 14,185,000 |
Required: Calculate the ratios for each company using the template provided in the next two pages. Decompose the ROE into its individual components using both the traditional and alternative approaches covered in weeks 4 & 5 of lectures. Ignore tax effects.
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