Question

DTO, Inc., has sales of $16 million, total assets of $14.1 million, and total debt of $8.2 million. Assume the profit margin is 6 percent. a. What is the company's net income? (Do not round intermediate calculations. Enter your answer in dollars not in millions, e.g., 1,234,567.) b. What is the company's ROA? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) c. What is the company's ROE? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Net income b. ROA ROE

Answer 1

The answer has been presented in the supporting sheet. For detailed answer refer to the supporting sheet.

Answer Part 1) A) Net Income = Sales *Profit margin percentage = 16000000*6% = $ 960000 B) Return On Assets (ROA) = Net Income / Total assets = 960000 / 14100000*100 = 6.81% C) Return on Equity (ROE) 1 = Net income / (total assets - toal debt) = 960000/(14100000-8200000) 5 = 16.27% 3 Thus the final answer is a Net Income ROA IC ROE 960000 6.81% 16.27%