Sales/total assets = 4x Return on assets = 10% Return on equity = 15% What is...
Sales/total assets = 4x Return on assets = 10% Return on equity = 15%
What is Goldstar's profit margin? What is Goldstar's debt ratio?
Homework Answers
Return on Assets = 10%
Net Income/Total assets = 10%
Total Assets = 10*Net Income............(1)
Sales/Total Assets = 4
Total Assets = Sales/4...............(2)
Equating (1) and (2)
Sales = 40*Net Income
Profit Margin = Net Income/Net Sales
= Net income/40*Net Income
= 2.5%
Debt ratio = Debt/Total Assets
Return on Equity = 15%
Net Income/Shareholders Equity = 15%
(Total Assets/10)/(Total Assets – Debt) = 15% -------------------- (Using 1)
Total Assets/10 = 0.15Total Assets – 0.15Debt
Total Assets = 1.5Total Assets – 1.5 Debt
0.5 Total Assets = 1.5Debt
Debt/Total Assets = 0.5/1.5
Debt Ratio = 1/3
Or 33.33%
Add Answer to:
Sales/total assets = 4x Return on assets = 10% Return on equity
= 15%
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