Problem: XYZ Company posts the following results along with information from comparable companies.
XYZ company Industry data
Year Net income Total Assets (net income / total assets)
1998 $350,000 $2,800,000 11.5%
1999 375,000 3,200,000 8.4%
2000 375,000 3,750,000 5.5%
Year Debt Total Assets (debt / total assets) 1998 $1,624,000 $2,800,000 54.1%
1999 1,730,000 3,200,000 42.0%
2000 1,900,000 3,750,000 33.4%
As an industry analyst comparing firms, are you more likely to praise or criticize XYZ company in terms of these indices and why:
- Net income / total assets
- Debt / total assets?