Firm M has a margin of 12%, turnover of 1.5, sales of $870,000, and average stoc

Question

Firm M has a margin of 12%, turnover of 1.5, sales of $870,000, and average stockholders' equity of $360,000. Required: Calculate Firm M’s average total assets, net income, return on investment (ROI), and return on equity (ROE).

Average Total Assets Choose Numerator: Choose Denominator Average Total Assets / = Average Total Assets / = 0 Net Income Choose Numerator: Choose Denominator Net Income × = Net Income × = Return on Investment Choose Numerator: Choose Denominator Return on Investment / = Return on Investment / = 0 Return on Equity Choose Numerator: Choose Denominator Return on Equity / = Return on Equity / = 0

Explanation / Answer

Average total assets Choose numerator choose denominator Average total assets Sales Turnover = Average total assets 870,000 1.5 =    580,000.00 Net income Choose numerator * Choose denominator = Net income Margin * Sales = Net income 12% *    870,000.00 =    130,500.00 ROI Choose numerator choose denominator = ROI Net income Average operating assets ROI    130,500.00    580,000.00 = 22.50% Return on Equity Choose numerator Choose denominator = Return on Equity Net income Average stockholer's equity    130,500.00    360,000.00 = 36.25%

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