Following are selected financial data in thousands of dollars for the Hunter Cor
ID: 2658909 • Letter: F
Question
Following are selected financial data in thousands of dollars for
the Hunter Corporation.
2012 2011
Current assets $ 500 $400
Fixed assets, net 700 600
Total assets 1,200 1,000
Current liabilities 300 200
Long-term debt 200 200
Common equity 700 600
Total liabilities and equity $1,200 $1,000
Net sales $1,500 $1,200
Total expenses 1,390 1,100
Net income 110 100.
a. Calculate Hunter
Explanation / Answer
Return on assets % = Net Income/Total Assets
For 2011, 100,000/1,000,000 = 0.1 or 10%
For 2012, 110,000/1,200,000 = 0.092 or 9.2%
The ratio worsened.
or
in a nutshell....
ROE = Net Income / Equity = (net income / sales) * (sales / assets) * (assets / equity)
ROA = Net Income / Total Assets = (net income / sales) * (sales / assets)