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Homework answers / question archive / Botswana Botox Distributors showed a profit margin of 5
Botswana Botox Distributors showed a profit margin of 5.6% last year on sales of $39,000,000. If its total asset level was $27,000,000 and total debt was $11,000,000 what were its ROA (return on assets) and ROE (return on equity)? O A. 13.745% ROA: 19.855% ROE O B.8.089% ROA: 13.650% ROE O C.40.741% ROA: 1.579% ROE O D. 3.877% ROA: 8.089% ROE O E. 19.855% ROA: 2.281% ROE
Net Income = 5.6*39000000/100 = 2184000
ROA = Net Income/Assets = 2184000/27000000
ROA = 8.089%
Equity = 16000000
ROE = Net Income / Equity
ROE = 2184000/16000000
ROE = 13.65%
Correct option is B
