Read ATC 9-3 in Chapter 9 and post your analysis of Whirlpool’s acquisition of Maytag.
To complete the requirements below you will need to obtain Whirlpool’s income statements for 2005, 2007, and 2008, and its balance sheets for 2004 through 2008. The easiest way to obtain these income statements is to retrieve the company’s 2005 and 2008 Form 10-Ks. To obtain the Form 10-Ks you can use either the EDGAR system following the instructions in Appendix A, or they can be found under the “Investors” link on the company’s corporate website, www.whirlpoolcorp.com. On March 31, 2006, Whirlpool Corporation acquired Maytag, another manufacturer of home appliances. The company’s 2006, 2007, and 2008 financial statements include the activities of Maytag; its 2005 and 2004 statements do not.
a.Compute the following ratios for 2005, 2007, and 2008. Show your calculations.
Gross margin percentage
Return on investment
Net margin Return on equity
Debt to assets ratio
b. Based on the ratios computed in Requirement a, comment on the apparent effects of Whirlpool’s acquisition of Maytag. Assume any significant change in these ratios was the result of the acquisition.
c. Based on this limited analysis, does it appear that the short-term effects of the acquisition were good or bad for Whirlpool?