Question
In: Finance
Assume the following data relating to the financials for the Candy Company (K). Company Balance Sheet...
Assume the following data relating to the financials for the Candy Company (K).
Company Balance Sheet
Total Assets $9,800,000
Debt $2,700,000
Company Income Statement
Revenue $15,200,000
Profit Margin 6%
Required:
Based on the above data, calculate the ROE for Candy Co.
Solutions
Expert Solution
Net income = Revenue * Profit Margin = $15,200,000 * 0.06 = $912,000
Equity = Total Assets - Debt = $9,800,000 - $2,700,000 = $7,100,000
ROE = Net income / Equity
ROE = $912,000 / $7,100,000
ROE = 0.1285 or 12.85%
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