Question

Saved Wims, Inc., has sales of $18.3 million, total assets of $13.3 million and total debt of $4.1 million. The profit margin is 11 percent. 2:33:21 a. What is the company's net income? (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to the nearest whole number, e.g., 1,234,567.) b. What is the company's ROA? (Do not round intermediate calculations and enter your answer as a percent rounded 2 decimal places, e.g.. 32.16.) What is the company's ROE? (Do not round intermediate calculations and enter your answer as a percent rounded 2 decimal places, e.g., 32.16.) a Net income b. ROA c. ROE

Answer 1

a) Profit margin = 11%

Profit margin = Net Income/Sales

11% = Net Income/$18,300,000

Net Income = $2,013,000

b) ROA = Net Income/Total Assets

ROA = $2,013,000/$13,300,000

RoA = 15.14%

c) Total Assets = Total debt + Total Equity

$13.3 mil = $4.1 mil + Total Equity

Total Equity = $9.2 million

ROE = Net Income/Total Equity

ROE = $2.013million/$9.2 million

ROE = 21.88%