Western World Has the Following Selected Data ($ in Millions)

question 75

Essay

Western World has the following selected data ($ in millions):
$\begin{array}{lrr}\text { Balance Sheet Data }&2012&2011\\\text { Total Assets } & \mathbf{\$ 2 , 5 1 1} & \mathbf{\$ 2 , 3 1 5} \\\text { Total Liabilities } & 1,685 & 1,525 \\\text { Total Stockholders' Equity } & 826 & 790\end{array}$

$\begin{array}{lr}\text { Income Statement Data }\\\text { Sales } & \$ 786 \\\text { Interest Expense } & 77 \\\text { Tax Expense } & 32 \\\text { Net Income } & 80\end{array}$
Based on these amounts,calculate the following ratios for Western World in 2012:
1.Debt to equity ratio.
2.Return on assets ratio.
3.Return on equity ratio.
4.Times interest earned ratio.

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Definitions:

Cash Inflows

Cash inflows refer to the money received by a business from its operating, investing, and financing activities.

Salvage Value

The estimated value that an asset will realize upon its sale at the end of its useful life.

Internal Rate

The rate of return that makes the net present value of all cash flows from a particular project equal to zero.

Payback Period

The length of time that it takes for a project to fully recover its initial cost out of the net cash inflows that it generates.