What is the company’s total assets? ( Do not round intermediate calculations. Ro
ID: 2723869 • Letter: W
Question
What is the company’s total assets? (Do not round intermediate calculations.Round your answer to the nearest whole number (e.g., 32).)
What is the company’s total equity? (Do not round intermediate calculations. Round your answer to the nearest whole number (e.g., 32).)
What is the company’s return on equity? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)
Martinez, Inc., has a total debt ratio of 0.60, total debt of $320,000, and net income of $39,500.Explanation / Answer
Debt ratio = 60%
Value of debt = $320,000
Net income = $39,500
a.
Company’s total assets = value of debt / Debt ratio
= $320,000 / 60%
= $533,333.33
Value of total assets is $533,333.33
b.
Value of company’s total equity = $53,333.33 - $320,000
= $213,333.33
Value of company’s total equity is $213,333.33.
c.
Return on equity = Net Income / Value of total equity
= $39,500 / $213,333.33
= 18.52%
Hence, return on equity is 18.52%.
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