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Note: Please use excel 3. Smith, Inc., has sales of $17.2 million, total assets of $16.1...

Note: Please use excel

3. Smith, Inc., has sales of $17.2 million, total assets of $16.1 million, and total debt of $7.5 million. If the profit margin is 5%, what is net income? ROA? ROE?

4. Vitron Corp. has a current accounts receivable balance of $483,810. Credit sales for the year ended were $5,700,000. What is the receivables turnover? The days’ sales in receivables?

5.Beakman, Inc. has ending inventory of $400,000, and a cost of goods sold for the year ended $3,800,000. What is the inventory turnover? The days’ sales in inventory?

Solutions

Expert Solution

Given,

Sales = $17.2 million

Total assets = $16.1 million

Total Debt = $7.5 million

Profit Margin = 5%

Net Income calculation:

Profit Margin = (Net Income/Sales)*100

5 = (Net Income/17.2)*100

After solving above equation, we get Net Income = $ 0.86 million

ROA Calculation:

Return on Asset (ROA) = (Net Income / Total Assets) * 100

ROA = ( 0.86/16.1)*100

ROA = 5.3416 %

ROE Calculations:

Return On Equity = (Net Income / Shareholders Equity)*100

We need to calculate Shareholders Equity using below equation

Assets = Liabilies + Equity

16.1 = 7.5 + Equity

Therefore Shareholders Equity = $ 8.6 millions

ROE = ( 0.86 / 8.6 )*100

ROE = 10%

Following snapshot shows the working in excel for the same:

jeff jeffy answered 2 years ago
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