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Calculate and analyze profitability and solvency relationships.
Net Net Total Total
Sales Income Assets Common Equity
Company (in millions) (in millions) (in millions) (in millions)
Intel Corporation $30,141 $5,641 $47,143 $37,846
Johnson & Johnson $41,862 $7,197 $48,263 $26,869
Motorola, Inc. $27,058 $893 $32,098 $12,689
Instructions
(a) Compute the following relationships for each company.
(1) Debt to total assets ratio.
(2) Profit margin percentage (rate of return on sales).
(3) Return on assets.
(4) Return on common stockholders’ equity.
(b) What reasons might there be for the differing relationships among these three companies? In your answer, consider the different kinds of industries these companies represent. Do any similarities or differences in the type of business help account for the differences you see?
