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Question: Hewlett-Packard and IBM are close competitors in the sale of computer products and technology consulting. Selected financial data for Hewlett-Packard and IBM are as follows:

431_HP.png

Required: 1. Calculate the return on assets for both companies. Compare the ratios with those calculated for Apple and Dell in Illustration 11-21 .

2. Calculate the cash return on assets for both companies. Compare the ratios with those calculated for Apple and Dell in Illustration 11-22.

3. Calculate the cash flow to sales ratio and the asset turnover ratio for both companies. Which company has the better ratios, Hewlett-Packard or IBM? Are Hewlett-Packard's and IBM's business strategies closer to Apple's or to Dell's?

1374_11-21.png

685_11-22.png

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