Botswana Botox Distributors showed a profit margin of 5

Finance Dec 23, 2020

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

Expert Solution

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

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