Recent financial statements for a major public company reportsthe following:Average total assets$2,355,000Average...Recent financial statements...

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Accounting

Recent financial statements for a major public company reportsthe following:
Average total assets
$2,355,000
Average shareholders' equity
$1,295,000
Net income
$211,750
Required:
Calculate the company’s return on equity and return onassets.
If the average ROE = 10.5% and average ROA = 6.5%; discuss thecompany’s ROE and ROA performance relative to its industry’saverage.
If the mean 5-year average ROE and ROA for the company are 6.2%and 3.8%; discuss the company’s ROE and ROA performance relative totheir recent average performance.
Given your comments above, would you consider investing in thecompany’s common stock, pending further investigation of otherrelevant issues? Please explain your answer.

Answer & Explanation Solved by verified expert

4.1 Ratings (792 Votes)

Part a Return on equityROE 211750 1295000100 1635 Return on AssetsROA 211750 2355000100 899 Part b The companys Performance relative to industrys average is much better due to the higher ROE and ROA Part c See Answer

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In: AccountingRecent financial statements for a major public company reportsthe following:Average total assets$2,355,000Average...Recent financial statements for a major public company reportsthe following:Average total assets$2,355,000Average shareholders' equity$1,295,000Net income$211,750Required:Calculate the company’s return on equity and return onassets.If the average ROE = 10.5% and average ROA = 6.5%; discuss thecompany’s ROE and ROA performance relative to its industry’saverage.If the mean 5-year average ROE and ROA for the company are 6.2%and 3.8%; discuss the company’s ROE and ROA performance relative totheir recent average performance.Given your comments above, would you consider investing in thecompany’s common stock, pending further investigation of otherrelevant issues? Please explain your answer.

Average total assets	$2,355,000
Average shareholders' equity	$1,295,000
Net income	$211,750