Assume the following data for Cable Corporation and Multi-Media Inc.
a. Compute the return on stockholders’ equity for both firms using ratio 3a. Which firm has the higher return?
b. Compute the following additional ratios for both firms:
Net income/Sales
Net income/Total assets
Sales/Total assets
Debt/Total assets
c. Discuss the factors from part b that added or detracted from one firm having a higher return on stockholders’ equity than the other firm as computed in part a.
