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Smith, Inc., has sales of $17.2 million, total assets of $16.1 million, and total debt of $7.5 million.

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? (10 Points)

(Use Excel and Excel Formulas)

Solutions

Expert Solution

NET INCOME = SALES * PROFIT MARGIN
17.2 * 5%
$ 0.86 MILLION
ROA (RETURN ON ASSETS) = NET INCOME / TOTAL ASSETS * 100
0.86 / 16.1 * 100
5.34%
ROA (RETURN ON EQUITY) = NET INCOME / TOTAL EQUITY * 100
0.86 / 8.6 * 100
10.00%
TOTAL EQUITY = TOTAL ASSETS - TOTAL DEBT
16.1 - 7.5
$ 8.6 MILLION

jeff jeffy answered 3 years ago
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