Question

Financial & Managerial Accounting for MBAs, 5th Edition by Easton, Halsey, McAnally, Hartgraves & Morse Practice Quiz Module 2 Introducing Financial Accounting 1. Following are selected income statement and balancc sheet data for comparies in aifferent industnes tLiabilities Harley-Davidson Nike, Inc. Starbucks Corp. Target Conp 5,342 3,302 2,040 S 960 5,255 1,212 8,794 3,514 2,171 $ 3,084 3,1495,545 1,423 2,091 2.408 34,995 20,790 14,205 13,740 7,824 6,116 6,3692,605 3,764 51,271 34,927 16,344 494 Which company repcrts the highest rao of net income to equity? b. Nike, Inc c. Starbucks Corp. d. Target Corp. 2. Following are selected income statement and balance sheet data for companies in different ind ustries t of goods Ne: profft lities E Harley-Davidson 5,342 3,302 2,040 $960 $ 5,25 S 2.171 Nike, Inc. Slarbucks Corp Target Carp. 3,084 13,740 7,6246.11 212 8,7943,149 5,845 3,514 1423 2,091 2,408 34,995 20,7 14,205 2,605 51,27134,927 16,344 6,365 3.761 494 Which company has financed itself with the highest percentage of liabil lies lo equity? h. Nike, Inc c. Starbucks Corp. d. Target Corp. Caumbride Business Publishers, 2018 2-1 Practice Qiz, Module 2

Answer 1

Solution

1) "a" Harley Davidson is the correct answer

Return on equity (ROE) is a measure of financial performance calculated by dividing net income by shareholders'equity. Because shareholders' equityis equal to a company's assets minus its debt, ROE could be thought of as the return on net assets

=Net income/shareholders equity

=960/3,084

=31.13%, which is highest among other options