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A fire has destroyed a large percentage of the financial records of the Excandesco Company. You...

A fire has destroyed a large percentage of the financial records of the Excandesco Company. You have the task of piecing together information in order to release a financial report. You have found the return on equity to be 16.7 percent. Sales were $1,795,000, the total debt ratio was .31, and total debt was $660,000.

What is the return on assets (ROA)?

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Answer #1

total debt ratio=Total debt/Total assets

Total assets=(660,000/0.31)

=$2,129,032.258(Approx)

Total assets=debt+equity

Hence equity =$2,129,032.258-$660,000

=$1,469,032.258

ROE=net income/equity

net income =$1,469,032.258*16.7%

=$245328.3871

ROA=net income/Total assets

=$245328.3871/$2,129,032.258

=11.523%

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