Evaluating Growth and Value Information is provided below from the 2002 annual reports of Sara Lee Corporation and Dell Computer.
|
(In millions) |
2002 |
2001 |
2000 |
1999 |
1998 |
|
Sara Lee |
|||||
|
Total assets |
$13,753 |
$10,167 |
$11,611 |
$10,292 |
$10,784 |
|
Common stockholders’ equity |
1,742 |
1,122 |
1,234 |
1,266 |
1,816 |
|
Sales |
17,628 |
16,632 |
16,454 |
16,277 |
16,526 |
|
Dell |
|||||
|
Total assets |
$13,535 |
$13,670 |
$11,471 |
$6,877 |
$4,268 |
|
Common stockholders’ equity |
4,694 |
5,622 |
5,308 |
2,321 |
1,293 |
|
Sales |
31,168 |
31,888 |
25,265 |
18,243 |
12,327 |
Required
A. Calculate the annual growth in assets, common equity, and sales for each company from 1998 through 2002. (Hint: To compute the growth rate from year to year, use the following formula—[(later year amount +earlier year amount) +earlier year amount].)
B. Evaluate and compare the two companies’ growth rates. As an investor, would the difference in growth rates make one firm more attractive as an investment than the other? Explain.