Shelton, Inc., has sales of $17 million, total assets of $15.9 million, and tota

Question

Shelton, Inc., has sales of $17 million, total assets of $15.9 million, and total debt of $8.8 million. Assume the profit margin is 6 percent.

What is the company's net income? (Do not round intermediate calculations. Enter your answer in dollars not in millions, e.g., 1,234,567.)
What is the company's ROA? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
What is the company's ROE? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Explanation / Answer

Net income = sales *Profit margin

                     = 17 * .06

                      = 1.02 million or $ 1,020,000

2)ROA = Return on asset = Net income /total asset

                                        = 1,020,000 / 15900000

                                         = .0642 or 6.42%

3)Equity = Total asset -Total debt

                = 15.9 -8.8 = 7.1 million

Return on equity = 1,020,000 / 7100000

                               = .1437 or 14.37%

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