Here and Gone, Inc., has sales of $19.9 million, total assets of $14.9 million,

Question

Here and Gone, Inc., has sales of $19.9 million, total assets of $14.9 million, and total debt of $5.7 million. Assume the profit margin is 12 percent.

What is net income? (Do not include the dollar sign ($). Enter your answer in dollars, not millions of dollars (e.g., 1,234,567).)

What is ROA? (Do not include the percent sign (%). Round your answer to 2 decimal places (e.g., 32.16).)

What is ROE? (Do not include the percent sign (%). Round your answer to 2 decimal places (e.g., 32.16).)

Here and Gone, Inc., has sales of $19.9 million, total assets of $14.9 million, and total debt of $5.7 million. Assume the profit margin is 12 percent.

Explanation / Answer

Requirement 1:

net income=19.9*12% =$2,388,000

Requirement 2:

ROA = 2.288/14.9 =16.03

Requirement 3:

Equity = 14.9 million- $5.7 million = 9.2 million

ROE = 2.388/9.2 = 25.96

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