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You have the following data for a company. What is the return on assets (ROA)? Return on equity =15 %; Earnings before taxes = $ 50,000; Total assets turnover = 1.2; Profit margin = 7.5%; Tax rate = 35%.
Expert Answer
Answer
Net Inome = $50,000 x 0.65 = $32,500;
Profit margin = 7.5% = 0.075
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Question & Answer: You have the following data for a company. What is the return on assets (ROA)?…..
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So, sales = $32,500 / .075 = $433,333
Total assets turnover = 1.2;
Total assets = $433,333 / 1.2 = $361,111;
ROA = $32,500 / 361,111 = .09 = 9%
