Here and Gone, Inc., has sales of $19.5 million, total assets of $14.5 million,

Question

Here and Gone, Inc., has sales of $19.5 million, total assets of $14.5 million, and total debt of $5.3 million. Assume the profit margin is 8 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 $19.5 million, total assets of $14.5 million, and total debt of $5.3 million. Assume the profit margin is 8 percent.

Explanation / Answer

1. Net income = sales * profit margin = 19,500,000*8% = 1,560,000

2. ROA = net income/total assets = 1,560,000/14,500,000 = 10.76%

3. Shareholders equity = total assets - debt = 14.5-5.3 = 9.2million

ROE = net income/shareholders equity = 1,560,000/9,200,000 = 16.96%

Hope this helped ! Let me know in case of any queries.

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