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A fire has destroyed a large percentage of the financial records of the Fire 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 14.23 percent. Sales were $1879870, the total debt ratio was 0.36, and total debt was $699911. What is the return on assets (ROA) in percent? Answer to two decimals. 0.09ROt Net insan Total 3buk

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Answer #1

Total debt ratio = Total debt / Total assets

0.36 = $699,911 / Total assets

Total assets = $699,911 / 0.36 = $1,944,197

Total equity = Total assets - Total debt = $1,944,197 - $699,911 = $1,244,286

Return on equity = Net income / Total equity

14.23% = Net income / $1,244,286

Net income = $1,244,286 * 14.23% = $177,062

Return on assets = Net income / Total assets = $177,062 / $1,944,197 = 9.11% ( rounded off to two decimals )

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