Shown are selected data from the 2015 annual report of CVS Health, a large drugs

Question

Shown are selected data from the 2015 annual report of CVS Health, a large drugstore chain. (Dollar amounts are in millions.) (Round your percentage answers to 1 decimal places. i.e. 0.123 as 12.3%.)

a. Compute for the year CVS Health's return on average total assets.

b. Compute for the year CVS Health’s return on average total stockholders’ equity.

a.Return on assets %
b.Return on equity%

Beginning
of the Year End of
the Year Total assets $ 74,187 $ 93,657 Total stockholders' equity 37,963 37,203 Operating income 9,454 Net income 5,239

Explanation / Answer

Average total assets = (Beginning total assets + Ending total assets) ÷ 2 = (74,187+93,657)÷2 = 167,844÷2 = $83,922

Average stockholders equity = (Beginning stockholders equity + Ending stockholders equity) ÷ 2 = (37,963+37,203)÷2 = 75,166÷2 = $37,583

a. Return on assets = Net Income ÷ Average total assets = 5,239÷83,922 = 0.0624 = 6.2%

b. Return on equity = Net Income ÷ Average stockholders equity = 5,239÷37,583 = 0.1394 = 13.9%

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.