Exam 9: Reorganizing the Financial Statements

Ratio Analysis: Consolidated Financial Statements $\$$ million Company A Company B Company C Income statement 150 Operating profit 120 100 (20) Interest 0 0 130 Earnings before taxes 120 100 (33) Taxes (30) (25) (33) net income 90 75 98 Operating tax rate 25.0\% 25.0\% 25.0\% Balance sheet Inventory 125 100 150 Property, plant, and equipment 400 400 365 Equity investments 0 50 0 Total assets 525 550 515 Accounts payable 50 50 50 Debt 0 0 190 Equity 475 500 275 Liabilities and equity 525 550 515 -Based on the above same table,what are the returns on equity (ROEs )for Companiesy A,B,and C,respectively?

In order to adjust for currency fluctuations,one should conduct a line-by-line removal of the currency effects.