Question

Profitability ratios: Cisco Systems has total assets of $35.594 billion, total debt of $9.678 billion, and net sales of $22.045 billion. Their net profit margin for the year was 20 percent, while the operating profit margin was 30 percent. What are Cisco’s net income, EBIT ROA, ROA, and ROE?

Answer 1

Total assets- $35.594 billion Total debt= 9.678 billion Net sales $22.045 billion Net profit margin-20% Operating profit margin-30% Net income Net profit margin- Net income 0.2 $22.045 $4.409 billion EBIT Sales Operating profit margin - EBIT 0.3$22.045 = $6.613 billion EBIT _ Total assets $35.594 $6.613 EBIT ROA Net income $4.409 Total assets $35.594 Total equity Total assets Total debt ROA- 12.4% $35.594 $9.678 $25.916 billion Total assets $35.594 Total equity $25.916 1.37 Equity multiplier = ROE ROA x EM 0.124× 1.37-1790

Answer 2

net income,	22.045 billion x 20% = 4.409 billion
EBIT	22.045 billion x 30% = 6.614 billion
ROA,	4.409 billion / 35.594 billion = 12.39%
ROE	35.594 - 9.678 = 25.916 billion total equity 4.409 / 25.916 = 17.01% RO

Answer 3

SOLUTION :

NP (net income)

= NPM * Sales 

= 0.20 * 22.045 

= 4.409 billion dollars. (ANSWER).

OP = EBIT 

= OPM * Sales 

= 0.30 * 22.045 

= 6.6135 billion dollars 

EBIT ROA 

= EBIT / Assets

= 6.6135/35.594

= 0.1858

= 18.58 % (ANSWER)

ROA

= NP / Assets

= 4.409 / 35.594

= 0.1239

= 12.39% (ANSWER)

Equity = Assets - Debt = 35.594 - 9.678 = 25.916 billion dollars.

ROE 

= NP / Equity

= 4.409 / 25.916

= 0.1701

= 17.01 % (ANSWER).