Pearman_Aileen_Applied Case Assignment 3.docx - ACCT 607 Applied Case Assignment#3(Chapters 5 and 13 Name Aileen Pearman Answer the following questions

Pearman_Aileen_Applied Case Assignment 3.docx - ACCT 607...

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ACCT 607 Name Aileen Pearman Applied Case Assignment #3 (Chapters 5 and 13) Answer the following questions based on McCormick & Company, Incorporated’s (NYSE: MKC; Sparks, MD; hereafter, “McCormick” or “the Company”) 2014 Annual Report (containing the Company’s 10-K) and the press release and related 10-Q filing for the second quarter ended May 31, 2015. These documents are available online at: Annual report: h t t p : / / p h x . co r p o r at e- i r . n et / E xte r n a l . F i l e ? i t e m = UG F y Z W5 0 S UQ9MjY4M z E 3 f E Noa W x k S UQ 9 L T F 8 V Hlw Z T 0z & t=1 Press release: h t t p : / / p h x . co r p o r at e- i r . n et / p h o e ni x . z h t m l? c =65454&p = i r o l- n ew s A r t i c l e & I D= 2 0639 4 2 , 10-Q filing: h t t p : / / se r vices . co r po r at e - i r . n et/S E C/Do cu m e n t. S ervice? id=P3 V yb D 1hS FI wY0 R v d k w y R n d h UzU wW l c1 c m Q ybDZ Z W E p r TG1O d m J T OWt i M2 R 1Ykc5 a F pDN XdhS E E v W VdOM G F X OXVQVk J F U m la c GN H R m 5aV D B 4 T URNMk 5 E Q X h OaV p6 Z F d K e m F X U T l O V GM9J n R 5cGU9 M iZmb j 1N Y0 N v c m 1p Y 2tDb21 w YW55 S W5 j L nBk Z g == Part I: Strategic Ratio Analysis 1. (a) Compute ROE and a three-factor ROE decomposition for the Company for the years ended 2014 and 2013. For simplicity, use year-end balances in your ratio computations. (4 pts) Ratio 2014 2013 ROE PM x AT x FL .103 x .96 x 2.44 = .24 = 24.13% PM x AT x FL .094 x.93 x2.28 = .199 = 19.93 % Profit Margin Net Income/Net sales 437.9 m / 4,243.2 = .103 =10.32% Net Income/Net sales 389.0 m / 4,123.4 = .094 = 9.43% Asset Turnover Sales/total assets @ year end 4,243.2 / 4,414.3 = .96 Sales/total assets @ year end 4,123.4 / 4,449.7 = .93 Financial Leverage
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