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Firm M has a margin of 11%, turnover of 1.6, sales of $860,000, and average stockholders' equity of $430,000. Required: Calculate Firm M’s average total assets, net income, return on investment (ROI), and return on equity (ROE).

Respuesta :

Answer:

Net income  $94600

Avg Total Assets $537,500  

ROI 17.6%

ROE 22%

Explanation:

Sales   $860,000.00

Turnover   1.60

Assets Turnover ratio = [tex]\frac{Sales}{Assets}[/tex]

1.60 = 860,000/Assets  

Avg Total Assets[tex] = \frac{860,000}{1.6} = $537,500[/tex]  

Margin =11%  

Net income =11% *860,000 = $94600  

[tex]ROI = \frac{Return}{Assets}[/tex]  

[tex]ROI = \frac{94600}{537,500} = 17.6%[/tex]  

[tex]ROE = \frac{Return}{Equity}[/tex]

        [tex]= \frac{94600}{430,000} = 22 %[/tex]

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