Analyzing and Interpreting Return on Assets – Tiffany & Co. is one of the world’s premier jewelers and a designer of other fine gifts and housewares. Presented here are selected income statement and balance sheet amounts (dollars in thousands).
|
Current Year |
Prior Year |
|
|
Net sales |
$2,859,997 |
$2,938,771 |
|
Net income |
220,022 |
323,478 |
|
Average shareholders’ equity |
1,652,243 |
1,721,131 |
|
Average total assets |
3,051,594 |
2,883,833 |
Required:
1. Compute ROA for the current and prior years and explain the meaning of the change.
2. Explain the major cause(s) of the change in ROA using ROA profit driver analysis.