if a firm's debt is $100,000, a firm's assets are $200,000, the net profit margin is...

if a firm's debt is $100,000, a firm's assets are $200,000, the net profit margin is 0.20, and the total asset turnover is 0.80, what is the firm's ROE?

Expert Solution

Asset turnover ratio=(net sales/total assets)

.8= (net sales/200000)

Net sales= (200000*.8)= $160,000

Net profit margin= (net profit / net sales)

.2= (net profit/160,000)

Net profits= (160,000*.2)= 32000

Total assets has been given and total death has also been given so total equity,

Total assets= liability + equity

Equity= (2,00,000-100,000)=100000

ROE= (net profits / total equity)=( 32000/100000)= 32%

Return on equity will be 32%.

jeff jeffy answered 2 years ago

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