Holding Company has the following three affiliates: Personal Foreign Software...
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Accounting
Holding Company has the following three affiliates:
Personal Foreign
Software Computers Operations
Sales $40,000,000 $60,000,000 $100,000,000
Net income (after taxes) 2,000,000 2,000,000 8,000,000
Assets 5,000,000 25,000,000 60,000,000
Stockholders equity 4,000,000 10,000,000 50,000,000
a. Which affiliate has the highest return on sales?
b. Which affiliate has the lowest return on assets?
c. Which affiliate has the highest total asset turnover?
d. Which affiliate has the highest return on stockholders equity?
e. Which affiliate has the highest debt ratio? (Assets minus stockholders equity equals debt.)
f. Returning to question b, explain why the software affiliate has the highest return on total assets.
g. Returning to question d, explain why the personal computer affiliate has a higher return on stockholders equity than the foreign operations affiliate even though it has a lower return on total assets.
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