Question

Following are selected income statement and balance sheet data for companies in different Industries. Harley Davidson...

Following are selected income statement and balance sheet data for companies in different Industries.
Harley Davidson
Sales = $5,342
COGS= $3,302
Gross Profit= $2,040
Net Income=$960
Assets=$5,255
Liabilities=$2,171
Equity= $3,084
Nike Inc
Sales=$13,740
COGS=$7624
Gross Profit=$6,116
Net Incone=$1,212
Assets=$8,794
Liabilities=$3,149
Equity=$5,645
Starbucks Corp.
Sales=$6,369
COGS=$2,605
Gross Profit=$3,764
Net Income=$494
Assets=$3,514
Liabilities=$1,423
Equity=$2,091
Target Corp.
Sales=$51,271
COGS=$34,927
Gross Profit=$16,344
Net Income=$2,408
Assets=$34,995
Liabilities=$20,790
Equity=$14,205
Which Company reports the highest ratio of net income to equity?



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Answer #1

Harley Davidson has highest ratio of net income to equity. Below is the calculation of the same:

Net income to equity ratio is given by:

Net income to equity ratio = Net income / Equity

For Harley Davidson:

Net income to equity ratio = $960 / $3084 = 31.13%

For Nike Inc:

Net income to equity ratio = $1212 / $5645 = 21.47%

For Starbucks Corp:

Net income to equity ratio = $494 / $2091 = 23.63%

For Target Corp:

Net income to equity ratio = $2408 / $14205 = 16.95%

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