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Wims, Inc., has sales of $15.2 million, total assets of $9.8 million, and total debt of $3.7 million. The profit margin is 6 percent. a. What is net income? (Do not round intermediate calculations and enter your answer in dollars, not millions, rounded to the nearest whole number, e.g., 1,234,567.) b. What is ROA? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) c. What is ROE?

Answer :

TomShelby

Answer:

A) 912,000 net income

B) ROA =   9.31%

C) ROE = 14.95%

Explanation:

a) net income:

[tex]\frac{income}{sales} =$profit margin[/tex]

sales x profit margin = net income

15,200,000 x 6% = 912,000 net income

b) ROA = return on assets

[tex]\frac{income}{assets} =$Return on Assets[/tex]

912,000/9,800,000 = 0,0930612 = 9.31%

b) ROE = return on equity

we use accounting equation to solve for equity:

aasets = liab + equity

9.8 M = 3.7M + E

E = 9.8 - 3.7 = 6.1

[tex]\frac{income}{equity} =$Return on Equity[/tex]

912,000/6,1000,000 = 0,1495081 = 14.95%

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