Problem 12-11 (Part Level Submission) (a) Problem 12-11 (Part Level Submission)
ID: 2472996 • Letter: P
Question
Problem 12-11 (Part Level Submission)
(a)
Problem 12-11 (Part Level Submission)
Consider the following data related to the financial performance of Royal Company:(in 000s) 2012 2013 2014 2015 Net income $3,740 $4,340 $5,030 $6,130 % change in income 0 16.04% 15.90% 21.87% Total assets $37,500 $47,925 $63,750 $87,500
Between 2012 and 2015, income increased by 64 percent, showing a significant increase in income each year. In light of this performance, the board of directors has awarded large bonuses to senior executives. However, the stock price has fallen from $73 per share in 2012 to $56 per share at the end of 2015.
Explanation / Answer
a. ROI for each year: ROI = Net Income / Total Assets x 100
2012 2013 2014 2015 ROI 9.97% 9.06% 7.89% 7%