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Julli [10]
3 years ago
8

Paw Locker has the highest Return on Assets in its comparison group. Which of the following could be a secret to its success?

Business
1 answer:
marysya [2.9K]3 years ago
6 0

Answer:

Paw Locker

The secret to its success include:

c. Uses more equity financing than Dog Nation

d. Pays less interest expense than Pooch Mart

e. Uses less debt financing than Hound Smart

Explanation:

a) Data and Calculations:

                           Company   Dog Shoe    Hound    Paw       Pooch

                                            Warehouse    Smart     Locker    Mart

Return on Equity      0.177        0.178          0.177       0.177         0.177

Return on Assets     0.060      0.119           0.112       0.126        0.111

Financial Leverage  3.740       1.501           1.762       1.430         1.639

Return on Sales       0.026      0.065          0.03       0.065       0.057

Asset Turnover        2.338      1.828           2.93         1.927         1.938

b) Paw Locker's Return on assets (ROA) indicates how profitable it is relative to its total assets.  Its ROA gives a manager, investor, or analyst an idea as to how efficient the Paw Locker's management is at using the company's assets to generate earnings.  As a percentage, Paw Locker's Return on assets is 12.6% and is better than the other companies' ROAs.

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Explanation:

First column is income and second is Carrying value.

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Dividend = 45% * 40,000

= $18,000

Income = 18,000 + 10,000

= $28,000

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