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1) ROA is 10
1) ROA is 10.4% and ROE is 16.5%. What is the debt to asset ratio (D/A)? (Answer should be a %).
2. A firm with $974 in assets has sales of $2,144 and NI of $176. What is the firm's ROA? (Answer is a % so multiply result by 100).
3.If a firm's profit margin is 11% and its total asset turnover is 1.2x, what is the firm's ROA?
Expert Solution
| 1) | Return On Equity (ROE) = Return On Assets * Financial Leverage | |||||
| 0.165=0.104*Equity Multiplier | ||||||
| 0.165/0.104 =Equity multiplier | ||||||
| Equity multiplier =1.58654 | ||||||
| Equity multiplier = total asset / equity | ||||||
| that means debt would be =1.58654-1 | ||||||
| =0.5865 | ||||||
| Detb to asset ratio =0.5865/1.5865 | ||||||
| =36.97% | ||||||
| 2) | ROA =176/974 | |||||
| =18.07% | ||||||
| 3) | ROA = profit margin * asset turnover | |||||
| =11%*1.2 | ||||||
| =13.2% |
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