Borland, Inc., has a profit margin of 6.4 percent on sales of $22,200,000. Assume the firm...

Question

Question

Borland, Inc., has a profit margin of 6.4 percent on sales of $22,200,000. Assume the firm has debt of $8,500,000 and total assets of $15,100,000.

What is the firm’s ROA?

Answer 1

Answer #1

Total Assets= $15,100,000

Total Debt=$8,500,000

Sales= $22,200,000

Profit Margin=6.4%

Profit Margin=Net Income $\div$ Sales

6.4%= Net Income $\div$ 22,200,000

Net Income= 22,200,000 $\times$ 6.4%

$\therefore$ Net Income= 1420800

Now; ROA= Net Income $\div$ Total Assets= 1,420,800 $\div$ 15,100,000= 0.0940 or 9.409%

Answer 2

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