Solve the problem. Please show steps a) Common Equity(C/E) is $400,000(No Debt), Sales are $600,000, NI...
Solve the problem. Please show steps a) Common Equity(C/E) is $400,000(No Debt), Sales are $600,000, NI is $25,000, ROE goal 15% What profit margin needed to hit goal? b) NI is $20,000. Year end assets are $300,000 Liabilities to Assets ratio is 40% What is ROE?
Homework Answers
a
| Profit margin% = Net income/sales |
| Profit margin% = 25000/600000 |
| Profit margin% = 4.17 |
b
Equity to asset =1-debt to asset = 1-0.4 = 0.6
equity = asset*equity to asset = 300000*0.6=180000
| ROE = Net income/total equity |
| ROE% = 20000/180000 |
| ROE% = 11.11 |
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Solve the problem. Please show steps a) Common Equity(C/E) is
$400,000(No Debt), Sales are $600,000, NI...
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