For the year ended Dec 31, 2018, Abeer Clothing Company has total assets of $87,631,181, ROA...

For the year ended Dec 31, 2018, Abeer Clothing Company has total assets of $87,631,181, ROA of 11.67 percent, ROE of 21.19 percent, and a profit margin of 11.59 percent. What are the company’s net income and net sales? Calculate the firm’s debt-to-equity ratio

Expert Solution

Total assets	87631181
ROA (Return on assets)	11.67%
ROA = Net income/Total Assets
.1167 = Net income/87631181
Net income = .1167*(87631181)
Net income = 10226559

Profit margin = Net income/Net Sales
Profit margin	11.59%
.1159 = 10226559/Net Sales
Net Sales = 10226559/(.1159)
Net Sales = 88236055

ROE (Return on equity)	21.19%
ROE = Net income/Shareholders equity
.2119 = 10226559/Shareholders equity
Shareholders equity = 10226559/.2119
Shareholders equity = 48261250
Total Debt = Total assets - Shareholders equity
Total Debt = 87631181 - 48261250
Total Debt = 39369931
Debt/Equity = 39369931/48261250
Debt/Equity = .82

The company's net income and net sales are $10226559 and $88236055 respectively.
The firm's Debt/Equity ratio is .82.

jeff jeffy answered 2 years ago

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