A fire has destroyed a large percentage of the financial records of the Excandes

Question

A fire has destroyed a large percentage of the financial records of the Excandesco Company. You have the task of piecing together information in order to release a financial report. You have found the return on equity to be 18.1 percent. Sales were $1,830,000, the total debt ratio was .31, and total debt was $667,000.
  
What is the return on assets (ROA)? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
  
Return on assets             %

Explanation / Answer

total debt ratio=Total debt/Total assets

Total assets=(667000/0.31)=$2151612.903

Total assets=debt+equity

Hence equity=($2151612.903-$667000)=$1484612.903

ROE=Net income/equity

Hence Net income=($1484612.903*0.181)=$268714.9355

ROA= Net income/Total assets

=$268714.9355/$2151612.903

=12.49%(Approx).

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.