Question

Assume you are given the following relationships for the Haslam Corporation:

Sales/total assets	1.2
Return on assets (ROA)	4%
Return on equity (ROE)	7%

Calculate Haslam's profit margin and liabilities-to-assets ratio. Do not round intermediate calculations. Round your answers to two decimal places.

Profit margin: ?%

Liabilities-to-assets ratio: ?%

Suppose half of its liabilities are in the form of debt. Calculate the debt-to-assets ratio. ?

Do not round intermediate calculations. Round your answer to two decimal places.

Answer 1

profit margin

=ROA/(Sales/total assets)

=4%/1.2

=3.33%

Liabilities-to-assets ratio=1-(equity/assets)=1-(ROA/ROE)

=1-(4%/7%)

=42.86%

the debt-to-assets ratio=42.86%/2=21.43%