E1-40. Computing Return on Equity

Starbucks reports net income for 2018 of $4,518.3 million. Its stockholders' equity is $5,450.1 million

and $1,169.5 million for 2017 and 2018, respectively.

emi

a. Compute its return on equity for 2018.

b. Starbucks repurchased over $7.208.7 million of its common stock in 2018. Did this repurchase

increase or decrease Starbucks' ROE?

c. If Starbucks had not repurchased common stock in 2018, what would ROE have been?

P1-41. Computing Return on Equity and Return on Assets

The following table contains financial statement information for Walmart Inc.

2016

Joel Tuoriniemi

Total Assets Net Income

$ 6,670

9,862

13,643

$219,295

204,522

198,825

Required

a. Compute return on equity (ROE) for the two recent years.

b. Compute retum assets (ROA) for the two recent years.

c. Compute profit margin (PM) for the two recent years.

d. Compute asset turnover (AT) for the two recent years.

e. Which of the following best explains the change in ROA during 2018?

1. The company's profitability weakened considerably.

2. The company's asset productivity weakened considerably.

3. The company had higher sales in 2018.

4. The company had higher assets 2018.

Cost of goods sold (COGS).

Cash from investing activities..

Cash, and of year..

Sales

$510,329

495,761

481,317

Income tax expense

Revenue

Total expenses, other than COGS

and income tax

57.3

15,740.4

P1-42. Formulating Financial Statements from Raw Data and Calculating Ratios

Following is selected financial information from General Mills Inc. for its fiscal year ended May 27,

2018 ($ millions).

$10,312.9 Cash from operating activities.

(8.685.4) Noncash assets, and of year

399.0 Cash from financing activities".

Total assets, beginning of year.

Total liabilises, and of year"

Stockholders' equity, end of year.

3,207.2

*Cash from financing activities includes the effects of foreign exchange rate fluctuations.

**Total abilities includes redeemable interest

Equity

$72,496

77,869

77,798

Required

a. Prepare the income statement for the year ended May 27, 2018

b. Prepare the balance sheet as of May 27, 2018

c. Prepare the statement of cash flows for the year ended May 27, 2018.

d. Compute ROA.

e. Compute profit margin (PM).

asset turnover (AT).

Joel Tu

Jo Tu

Joel Criniemi

LO4

Starbucks (SBUX)

$ 2,841.0

30,225.0

5.477.3

218126

24,131.6

6,492.4

Tuoriniemi

MBC

Problems

LO4

Walmart Inc. (WMT)

iniemi

on or

MBC