Sales 720000 total debt 280000 profit margin 850 return o

Sales = $720,000, total debt = $280,000, profit margin = 8.50%, return on equity = 13.60%. What is the return on assets? Please show all steps.

Solution

Net income = Profit margin * Sales = 8.5% * 720,000 = 61200
Equity = Net Income/Return on equity = 61200/(13.60%) = 450,000
Total Asset = Total Debt + Total Equity = 280,000 + 450,000 = 730,000

Return on Assets = Net Income/ Total assets = 61200/730,000 = 8.38%

Best of Luck. God Bless
Please Rate well