Keller Cosmetics maintains an operating profit margin of 8.60% and a sales-to-as
ID: 2720690 • Letter: K
Question
Keller Cosmetics maintains an operating profit margin of 8.60% and a sales-to-assets ratio of 3.10. It has assets of $620,000 and equity of $420,000. Interest payments are $42,000 and the tax rate is 35%. a. What is the return on assets? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Return on assets 26.66 % b. What is the return on equity? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Essentially the first answer is right and I need the second one. I have asked this twice now with two bad answers so if sombody could do it right that would be titty. The class is for financial policy so do the problem accordingly
Explanation / Answer
3.1=sales/620000 sales= 1922000 operating margin = operating income/sales ie=8.6%=OI/1922000 OI = 165292 ROE = net income/equity ie=((165292-42000)*(1-0.35))/420000 ie= 19.08%
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