(Learning Objective 6: Computing return on assets and return on equity for a leading company) Sony Corpration’s 2006 financial statements reported the following items, with 2005 figures given for comparison (adapted and in millions). Compute Sony’sreturn on assets and return on common equity for 2006. Evaluate the rates of return as strong or weak. ¥ is the symbol for the Japanese yen.
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2006 |
2005 |
|
|
Balance sheet |
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Total assets |
¥10,608 |
¥9,499 |
|
Total liabilities |
¥ 7,404 |
¥6,629 |
|
Total stockholders’ equity (all common) |
3,204 |
2,870 |
|
Total liabilities and equity |
¥10,608 |
¥9,499 |
|
Income statement |
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Revenues and other income |
¥ 7,629 |
|
|
Operating expense |
7,284 |
|
|
Interest expense |
29 |
|
|
Other expense |
192 |
|
|
Net income |
¥ 124 |