Comparing Investment Performance The information below is for two companies in the same industry.
|
Griffith, Inc. |
Johnson, Inc. |
|||
|
(In millions) |
2005 |
2004 |
2005 |
2004 |
|
Sales |
$8,223 |
$7,338 |
$9,430 |
$9,400 |
|
Net income |
817 |
701 |
822 |
840 |
|
Total assets |
7,250 |
6,490 |
8,347 |
8,350 |
|
Total liabilities |
3,200 |
3,030 |
5,230 |
4,960 |
|
Market value |
9,200 |
7,650 |
5,220 |
5,790 |
Required
A. Compute the asset turnover, profit margin, return on assets, and market to book value for each year and company. Also compute asset growth for each company from 2004 to 2005.
B. Compare the performances of the two companies over the two year period with respect to effectiveness and efficiency.
C. Explain what reasons you find for the differences in the market value of the two companies. Could there be additional explanatory factors that do not appear in these numbers?