Lawn Care, Inc., has sales of $367,400, costs of $183,600, depreciation of $48,600, interest of $39,200,...
Lawn Care, Inc., has sales of $367,400, costs of $183,600, depreciation of $48,600, interest of $39,200, and a tax rate of 25 percent. The firm has total assets of $422,100, long-term debt of $102,000, net fixed assets of $264,500, and net working capital of $22,300. What is the return on equity?
Multiple Choice
-
24.26 percent
-
15.38 percent
-
38.96 percent
-
29.96 percent
-
17.06 percent
Homework Answers
| Sales | 367400 |
| Costs | (183600) |
| Depreciation | (48600) |
| EBIT | 135200 |
| Less:interest expense | (39200) |
| EBT | 96000 |
| Less:taxes(96000*25%) | (24000) |
| Net income | 72000 |
Total assets=Fixed assets+Current assets
Hence current assets=422100-264500
=$157600
Net working capital=Current assets-Current liabilities
Hence current liabilities=(157600-22300)=$135300
Total assets=Total liabilities+Equity
422100=(135300+102000)+equity
equity=422100-(135300+102000)
=$184800
ROE=Net income/equity
=72000/184800
=38.96%(Approx).
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Lawn Care, Inc., has sales of $367,400, costs of $183,600,
depreciation of $48,600, interest of $39,200,...
Lawn Care, Inc., has sales of $367,400, costs of $183,600, depreciation of $48,600, interest of $39,200,...
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