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In: Finance

A fire has destroyed a large percentage of the financial records of the Inferno Company. You...

A fire has destroyed a large percentage of the financial records of the Inferno Company. You have the task of piecing together information in order to release a financial report. You have found the return on equity to be 15.3 percent. Sales were $1,760,000, the total debt ratio was .35, and total debt was $653,000.

What is the return on assets (ROA)? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Return on Assets %?

Solutions

Expert Solution

total debt ratio=0.35

debt/assets=0.35

653000/assets=0.35

assets=653000/0.35=1865714.29

equity=1865714.29*(1-0.35)=1212714.29

ROE=ROA*(assets/equity)

15.3%=ROA*(1865714.29/1212714.29)

ROA=15.3%*(1212714.29/1865714.29)

=9.95%

jeff jeffy answered 2 years ago
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