In: Finance
The Rangoon Timber Company has the following ratios: Net
sales/Total assets = 2.26; ROA 8.95%; ROE 17.09%. What are
Rangoon’s profit margin and debt ratio? (Round answer
to 2 decimal places, e.g. 12.55 or 12.55%.)
Rangoon’s profit margin is % and its debt ratio is . |
profit margin = ROA/total assets turnover
= 0.0895/2.26
= 3.96%
equity multiplier = ROE/ROA
= 0.1709/0.0895
= 1.9094972067
debt ratio = 1 - 1/equity multiplier
= 1 - 1/1.9094972067
= 0.48