Response to the following questions:
1. a. Total assets of Caldwell Company equal $40,000 and its equity is $10,000. What is the amount of its liabilities?
b. Total assets of Water world equal $55,000 and its liabilities and equity amounts are equal to each other. What is the amount of its liabilities? What is the amount of its equity?
2. In a recent year's financial statements, Home Depot reported the following results. Compute and interpret Home Depot's return on assets (assume competitors average a 5% return on assets).
Sales . . . . . . . . . . . . . . . . . . . . . . $71,288
million Net income . . . . . . . . . . . . . . . . 2,260
million Average total assets . . . . . . . . . . 42,744 million