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Debora [2.8K]
3 years ago
9

A firm has a profit margin of 12 percent; total asset turnover of 0.55 and an equity multiplier of 2.2. What is the firm's ROA a

nd ROE?
Business
1 answer:
lutik1710 [3]3 years ago
6 0

Answer:

ROA = 6.6%

ROE 14.52%

Explanation:

profit margin = net income / sale = 12%

assets turn over = sales / assets = 0.55

equity mutiplier = assets / equity = 2.2

ROE = return on equity = net income / equity

ROA = return on equity = net income / assets

we use the fraction properties to get ROE and ROA

\frac{income}{sales} \times \frac{sales}{Assets} =\frac{income}{Assets} \\ 0.12 \times 0.55 = 0.066\\

ROA = 6.6%

We apply the same property to get ROE

\frac{income}{assets} \times \frac{assets}{equity} =\frac{income}{equity} \\ 0.066 \times 2.2 = 0.14252\\

ROE = 14.52%

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3 years ago
Jorgensen High Tech Inc. is a calendar-year, accrual-method taxpayer. At the end of year 1, Jorgensen accrued and deducted the f
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Answer:

$100,000

Explanation:

Based on the information given Jorgensen may lessen the amount of $100,000 in the second year which is year 2 reason been that the amount are NOT FIXED amount at the end of the year 1 because the employees are qualified to receive the bonus amount only in a situation where the employees are been employed on the date the bonuses amount were been paid.

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4 0
3 years ago
Sea Side Enterprises is trying to predict the cost associated with producing its anchors. At a production level of​ 5,300 anchor
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Answer:

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Answer:

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Interest paid based on invested capital is considered a distribution of profit by the business and not an expense. This is similar to sharing profit to shareholders in a company.

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