291
Case 9–4
1. a. Return on Total Assets = AssetsTotal Average
Expense Interest + Income Net
b. Return on Stockholders’ Equity = Equity rs’Stockholde Total Average
IncomeNet
c. Earnings per Share = Net Income –– Preferred Dividends
Common Shares Outstanding
292
Case 9–4, Continued
d. Dividend Yield = Dividend per Share of Common Stock
Market Price per Share of Common Stock
e. Price-Earnings Ratio = Stock Common of Share per Earnings
Stock Common of Share per PriceMarket
2.
Average Total Assets –– Average Total Stockholders’ Equity
Debt Ratio = Average Total Assets
293
Case 9–4, Concluded
Ratio of Average Liabilities to
Average Stockholders’ Equity = Average Liabilities
A
verage Stockholders’ Equity =
Equity rs’Stockholde Average
Equity rs’Stockholde Total Average–– AssetsTotal Average
3. Harley-Davidson’s profitability, as measured by earnings per share, has fluc-
294
Case 9–5
1. a. Return on Total Assets = AssetsTotal Average
Expense Interest + Income Net
b. Return on Total Stockholders’ Equity = Equity rs’Stockholde Total Average
IncomeNet
c.
Times Interest Earned = Income Before Income Tax + Interest Expense
Interest Expense
d. Debt Ratio = Total Liabilities
Total Assets
295
Case 9–5, Concluded
e. Ratio of Liabilities to Stockholders’ Equity = Total Liabilities
Total Stockholders’ Equity
Summary Table:
Starwood Wyndham
Return on total assets 8.9% 7.6%
2. Starwood has a higher return on total assets (8.9% vs. 7.6%), but