Question

In: Finance

A fire has destroyed a large percentage of the financial records of the Excandesco Company. You...

A fire has destroyed a large percentage of the financial records of the Excandesco Company. You have the task of piecing together information in order to release a financial report. You have found the return on equity to be 16.7 percent. Sales were $1,795,000, the total debt ratio was .33, and total debt was $660,000.

What are the total assets? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)

Total assets            $

What is the total equity? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)

Total equity            $

What is the net income? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)

Net income            $

What is the return on assets (ROA)? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Return on assets             %

Solutions

Expert Solution

Solution:-

a) Total assets = $2,000,000

b)Total Equity = $1,340,000

c) Net income = $223,780

d) ROA               = 11.19%

Calculations:-

We know that ROE = Net income / Equity

Hence to find the return on equity, we need the net income and total equity.

We can use the total debt ratio to find the total assets as:

Total debt ratio = Total debt / Total assets

0.33 = $660,000 / Total assets

Total assets = $2,000,000.00

In balance sheet we know that total assets is equal to total liabilities and equity, we find the total equity is:

Total assets = Total debt + Equity

$2,000,000.00= $660,000 + Equity

Equity = $1,340,000.00

We have the return on equity and the equity. We can use the return on equity equation to find net income is:

ROE = Net income / Equity

0.1670 = Net income / $1,340,000.00

Net income = $223,780.00

Now we find the ROA is:

ROA = Net income / Total assets

ROA = $223,780.00/ $2,000,000.00

ROA = 0.11189 or 11.19%

Please feel free to ask if you have any query in the comment section.


Related Solutions

A fire has destroyed a large percentage of the financial records of the Inferno Company. You...
A fire has destroyed a large percentage of the financial records of the Inferno Company. You have the task of piecing together information in order to release a financial report. You have found the return on equity to be 15.3 percent. Sales were $1,760,000, the total debt ratio was .35, and total debt was $653,000. What is the return on assets (ROA)? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g.,...
The financial records of Manchester Corporation were destroyed by fire at the end of 2017. Fortunately,...
The financial records of Manchester Corporation were destroyed by fire at the end of 2017. Fortunately, the controller had kept the following statistical data related to the income statement and the balance sheet in addition to the published balance sheet of the year 2017: The beginning merchandise inventory was $92,000 and decreased 20% during the current year. Sales discounts amount to $17,000. Interest expense was $20,000. The income tax is $106,000. Cost of goods sold amounts to $500,000. Administrative expenses...
The financial records of Leon Paul Inc. were destroyed by fire at the end of 2017....
The financial records of Leon Paul Inc. were destroyed by fire at the end of 2017. Fortunately the controller had kept certain statistical data related to the income statement as presented below. 1. The beginning merchandise inventory was $184,000 and decreased 20% during the current year. 2. Sales discounts amount to $34,000. 3. 20,000 shares of common stock were outstanding for the entire year. 4. Interest expense was $40,000. 5. The income tax rate is 30%. 6. Cost of goods...
The financial records of Leon Paul Inc. were destroyed by fire at the end of 2017....
The financial records of Leon Paul Inc. were destroyed by fire at the end of 2017. Fortunately the controller had kept certain statistical data related to the income statement as presented below. 1. The beginning merchandise inventory was $184,000 and decreased 20% during the current year. 2. Sales discounts amount to $34,000. 3. 20,000 shares of common stock were outstanding for the entire year. 4. Interest expense was $40,000. 5. The income tax rate is 30%. 6. Cost of goods...
The financial records of LeRoi Jones Inc. were destroyed by fire at the end of 2017....
The financial records of LeRoi Jones Inc. were destroyed by fire at the end of 2017. Fortunately, the controller had kept certain statistical data related to the income statement as follows. 1. The beginning merchandise inventory was $92,000 and decreased 20% during the current year. 2. Sales discounts amount to $17,000. 3. 20,000 shares of common stock were outstanding for the entire year. 4. Interest expense was $20,000. 5. The income tax rate is 30%. 6. Cost of goods sold...
Jack's business premises were destroyed in a fire and all his records were lost apart from...
Jack's business premises were destroyed in a fire and all his records were lost apart from a recent analysis that he had made of the latest period's results for his company. He managed to retrieve the following: Sales: $375000 GP margin: 28% Total expenses ratio: 17% Tax Rate 30% Debt of equity 0,75:1 Current Assets as percentage of cost of 22% Sales Current ratio 1.8:1 Return on Equity 11% Question: From the information given reconstruct a Statement of Profit or...
Beek’s house was destroyed by fire and claims were filed with the insurance company.
  Beek’s house was destroyed by fire and claims were filed with the insurance company. The insurance company (insurer) hired James to investigate the fire as it was suspicious about the cause. Subsequently, the insurer denied the claims based on James’s report. Thompson sued the insurer and Cannon. Beek claimed to be a third party beneficiary of the James-insurer contract. Is Beek correct? If so what type of beneficiary is he and why?
Problem 8-28B Computing variances A fire destroyed most of Ordessa Products Corporation’s records. Megan Carey, the...
Problem 8-28B Computing variances A fire destroyed most of Ordessa Products Corporation’s records. Megan Carey, the company’s accountant, is trying to piece together the company’s operating results from salvaged documents. She discovered the following data: Standard materials quantity per unit 2.5 pounds Standard materials price $8 per pound Standard labor quantity per unit 0.6 hour Standard labor price $24 per hour Actual number of products produced 8,000 units Materials price variance $3,168 Favorable Materials usage variance $1,600 Favorable Labor price...
A company had a tractor destroyed by fire. The tractor originally cost $134,000 with accumulated depreciation...
A company had a tractor destroyed by fire. The tractor originally cost $134,000 with accumulated depreciation of $68,100. The proceeds from the insurance company were $29,000. The company should recognize
A computer virus destroyed some of the accounting records for Hampton Furniture Company for the periods...
A computer virus destroyed some of the accounting records for Hampton Furniture Company for the periods of 2017-2019. The following information was salvaged from the computer system. 12/31/17 12/31/18 12/31/19 Beginning direct materials $ 50,250 F $ 45,210 Purchases of direct materials A 65,250 70,125 Ending direct materials 34,165 45,210 L Direct materials used 91,385 54,205 M Direct labor B 155,050 162,000 Manufacturing overhead 115,325 G 127,145 Total manufacturing costs C 319,255 364,130 Beginning work-in-process inventory 36,450 H 29,635 Ending...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT