Complete Financial Analysis Discussion Post
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Problem 9-37 |
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COMPANY |
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|
Adam |
Basil |
Collin |
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|
Sales |
$8,500,000 |
$1,500,000 |
$29,000,000 |
|
Income |
$765,000 |
$180,000 |
$180,000 |
|
Capital |
$3,200,000 |
$12,000,000 |
$12,000,000 |
1. Why would you desire the breakdown of ROI into return on sales and turnover on capital?
2. Compute the return on sales, turnover on capital and ROI for the three companies, and comment on the relative performance as the data permit.
|
Adam |
Basil |
Collin |
|
|
Return on Sales (income/sales) |
9.00% |
12.00% |
0.62% |
|
Turnover on capital (sales/ capital) |
2.66 |
0.13 |
2.42 |
|
ROI (income/ capital) |
23.91% |
1.50% |
1.50% |
3.
Discuss the types of strategies that Basil and Collin might be employing.
