(Solved) Referring to the CFM Majestic financial statements, pick the most informative explanation for why ...

Balance Sheet

CFM Majestic Inc.

Years 1 & 2 ($000,000s)

	Year 1	Year 2
Cash	29.2	21.2
A/R	108.2	122.6
Inventory	74.0	79.7
Total Current Assets	211.4	223.5
Fixed Assets, Net	81.6	94.1
Goodwill	159.6	184.5
Total Assets	452.6	502.1
Accounts Payable	46.4	50.5
Short-term Debt	23.0	27.0
Total Current Liabilities	69.4	77.5
Long Term Debt	125.8	128.5
Deferred income taxes	14.0	18.6
Equity
Share Capital	148.9	151.8
Retained Earnings	94.5	125.7
Owners' Equity	243.4	277.5
Total Liabilities & Equity	452.6	502.1

Income Statement

CFM Majestic Inc.

Years 1 & 2 ($000,000s)

	Year 1	Year 2
Sales	381.9	416.3
COGS	244.9	278.9
SG&A	59.7	63.8
Depreciation	13.8	15.4
R & D	5.3	4.3
EBIT	58.2	53.9
Interest Expense	7.3	7.9
Earnings before Income Tax	50.9	46.0
Income Taxes	17.3	14.8
Net Income	33.6	31.2

Referring to the CFM Majestic financial statements, pick the most informative explanation for why ROA fell.

▸ ROA fell because both gross margin fell and Selling, General & Admin expenses as a percentage of sales fell.

▸ ROA fell because Total Asset Turnover fell.

▸ ROA fell because the Equity Multiplier fell and because Cost of Goods Sold over Sales rose.

▸ ROA fell because Net Income grew more slowly than Total Assets.

▸ ROA fell mainly because gross margin fell.

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Referring to the CFM Majestic financial statements, pick the most informative explanation for why ...

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