The Practice Problem at the end of the chapter contains

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The Practice Problem at the end of the chapter contains the financial statements and ratios for
Le Chateau Inc. In Canada, Le Chateau and H&M are direct competitors in the fashion retail
market for young adults.Required:Use the information from the Practice Problem, the financial
statements of H&M in Appendix A, and the ratios calculated in problem 12-47 to answer the
following questions:a. Compare the inventory turnover and gross margin for the two companies.
Are there any factors that make this comparison less reliable?b. Compare the profitability and
ROA for the two companies. What do you think explains the differences?c. Compare the ROE
and use of leverage for the two companies. Which company provides a higher return to its
shareholders? Which company has more financial risk from the point of view of the
shareholders?d. Discuss the reasons doing a direct cross-sectional comparison of these two
companies. Discuss the reasons for not doing one.View Solution:
The Practice Problem at the end of the chapter contains

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