Please calculate the following for each year:
Return on Investment
Return on Equity
Asset Turnover Ratio
EPS (assume there are 100,000 shares outstanding).
Price Earning Ratio (assume the current market price is $25 per share).
2. Please also submit for this task a 1-page WORD document to the president. This letter should explain the meaning of the financial ratios and percentages.
NOTE: You do not have beginning balances for Year 2004 financial data, and cannot calculate the averages needed for some of the financial calculations. Please therefore do not attempt to calculate averages. Use the available ending balances to calculate year 2004 statistics. Use the available ending balances to calculate year 2005 statistics.
See attached file for full problem description.
Computation plus interpretation given for you.