The Rangoon Timber Company has the following ratios: Net sales/Total assets = 2.26; ROA 8.95%; ROE...

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 .

Solutions

Expert Solution

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

jeff jeffy answered 2 years ago

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