User Account

All Pages

Which contributed the most to the change in roe

Assignment Help Accounting Basics
Reference no: EM131626219

Question: The following summary financial statistics were obtained from the 2015 Otago Bay Marine Motors (OBMM) annual report.

                                          2015
                                    ($ in millions)

Sales Revenue                    $179.3

Total assets                       $136.3

Net earnings                       $ 20.2

Shareholder's equity             $109.6

a. Use the profit margin and asset turnover to compute the 2015 ROA for OBMM. Now introduce the equity multiplier to find ROE.

b. Use the summary financial information from the 2016 OBMM financial statements (see Problem 7.17) to compute the 2016 ROA and ROE. Use the same procedures to calculate these measures as you did in part a.

c. On the basis of your calculations, describe how each of the three components (profit margin, asset turnover, and leverage) contributed to the change in OBMM's ROA and ROE between 2015 and 2016. Which component(s) contributed the most to the change in ROA? Which contributed the most to the change in ROE?

d. Generally speaking, do you think that these changes are fundamentally healthy for the company?

Reference no: EM131626219

Questions Cloud

Field of political economy uses the tool : Consider the term political economy, and how it's applied to the field of political economy uses the tool.
Identify the means of hacking web browsers : Identify the means of hacking Web browsers. Describe security concerns, tools, and techniques associated with Web servers and Web applications.
Longer practiced using simple but rather ineffective tools : Use improved Tools and Implements: Farming is no longer practiced using simple but rather ineffective tools.
Profitable small business in washington : Suppose you own a profitable small business in Washington, D.C. You desire to hold an essential 1-hour meeting with business executives in New York
Which contributed the most to the change in roe : On the basis of your calculations, describe how each of the three components (profit margin, asset turnover, and leverage) contributed to the change in OBMM's.
Operations strategies can be named as low cost : Operations strategies can be named as low cost, short processing time, on time delivery, high–performance design and/ or high-quality processing,
Strategies in social research-give pros and cons for each : Identify at least three methods of data collection strategies in social research; give pros and cons for each,
Bls current employment statistics survey : Select one of the following surveys as a team, from the BLS Current Employment Statistics survey (National):
Describe any involvement that you have had : Describe any involvement that you have had. If you have not had any involvement, describe an area in which you would like to see public policy changed.

Reviews

Write a Review

Accounting Basics Questions & Answers

  How much control does fed have over this longer real rate

Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest.   How much control does the Fed have over this longer real rate?

  Coures:- fundamental accounting principles

Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.

  Accounting problems

Accounting problems,  Draw a detailed timeline incorporating the dividends, calculate    the exact Payback Period  b)   the discounted Payback Period. the IRR,  the NPV, the Profitability Index.

  Theory of interest - term structure of interest rates

Term Structure of Interest Rates

  Write a report on internal controls

Write a report on Internal Controls

  Prepare the bank reconciliation for company

Prepare the bank reconciliation for company.

  Cost-benefit analysis

Create a cost-benefit analysis to evaluate the project

  Theory of interest

Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR

  Liquidity and profitability

Distinguish between liquidity and profitability.

  What is the expected risk premium on the portfolio

Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.

  Simple interest and compound interest

Simple Interest, Compound interest, discount rate, force of interest, AV, PV

  Capm and venture capital

CAPM and Venture Capital

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +91-977-207-8620

Phone: +91-977-207-8620

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd