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Calculate each companys roe roa and roic

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Reference no: EM13892282

Answer the questions below based on the following information. The tax rate is 35 percent and all dollars are in millions.

 

 

Locktite Inc.

Stork Systems

Earnings before interest and taxes

$380

$ 394

Debt (at 10% interest)

$240

$1,240

Equity

$760

$ 310

a. Calculate each company's ROE, ROA, and ROIC.

b. Why is Stork's ROE so much higher than Locktite's? Does this mean Stork is a better company? Why or why not?

c. Why is Locktite's ROA higher than Stork's? What does this tell you about the two companies?

d. How do the two companies' ROICs compare? What does this sug- gest about the two companies?

Reference no: EM13892282

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