A firm has a profit margin of 21 percent on sales of 2000000
A firm has a profit margin of 21 percent on sales of $20,000,000. If the firm has debt of S7,500,000, total assets of $24,000,000, and an after-tax interest cost on total debt of 5 percent, what is the firms ROA? Express your answer in percentage (without the % sign) and round it to two decimal places, 15.67, for exapmle.
Solution
ROA = Profit margin x Sales / Total Assets
ROA = 21% x 20,000,000 / 24,000,000
ROA = 17.50 Percentage
