Answer the Questions Below Based on the Following Information

question 14

Essay

Answer the questions below based on the following information.The tax rate is 35% and all dollars are in millions.Assume that the companies have no liabilities other than the debt shown below.a.Calculate each company's ROE,ROA,and ROIC.b.Why is Runrun's ROE so much higher than Suunto's? Does this mean Runrun is a better company? Why or why not?
c.Why is Suunto's ROA higher than Runrun's? What does this tell you about the two companies?
d.How do the two companies' ROICs compare? What does this suggest about the two companies?
$$\begin{array} { l r r } \hline & \text { Suunto Inc. } & \text { Runrun Corp. } \\\hline \text { Earnings before interest and taxes } & \$ 280 & \$ 294 \\\text { Debt (at } 10 \% \text { interest) } & \$ 140 & \$ 840 \\\text { Equity } & \$ 560 & \$ 210 \\\hline\end{array}$$

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Definitions:

ANOVA Models

ANOVA models are statistical models used to analyze the differences among group means in a sample, typically by comparing variance between groups to variance within groups.

Degrees of Freedom

The count of independent variables or measurements that can be allocated to a statistical distribution, subtracting the quantity of estimated parameters.

Number of Blocks

In experimental design, the total count of groups or sets into which experimental units are divided for the purpose of minimizing variance due to confounding variables.

Randomized Block Design

A statistical experiment design that aims to reduce variability among experimental units by grouping them into blocks before randomly assigning treatments.