Homework Answers
Sales = $6,000,000
Total Assets Turnover Ratio = 2.6
Sales/Total Assets = 2.6
6,000,000/Total Assets = 2.6
Total Assets = $2,307,692.31
Debt to Assets Ratio = 40%
Debt = $923,076.924
Equity = 2,307,692.31- $923,076.924 = $1,384,615.386
EBIT = $666,000
Less: Interest $222,000
EBT = $444,000
Less: Tax @30% = $133,200
Earnings for Equity = $310,800
ROE = Earnings for Equity/Equity Funds
= 310,800/1,384,615.386
= 22.45%
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