Aqufera, Inc., has sales of $19.1 millon, total assets of $14.1 miltion, and tot

Question

Aqufera, Inc., has sales of $19.1 millon, total assets of $14.1 miltion, and total debt of $4.9 million. The profit margin is 9 percent. What is the company's net income? (Enter your answer in dollars, not millions of dollars, e.g., 1,234,567. Do not round intermedi Net income S ate c calculations and round your answer to the nearest whole number, e.g., 32.) What is the company's ROA? (Do not round intermediate calculations and enter your answer as a percent rounded 2 decimal places, e.g. 32.16.) ROA What ls the company's ROE? (Do not round intermediate calculations ROE and enter your answer as a percent rounded 2 decimal places, e.g, 32.16.) Hints References eBook & Resources Hint#1 Check.my wors

Explanation / Answer

1)

Profit margin = net income / sales

0.09 = Net income / 19,100,000

Net income = $1,719,000

2)

Return on Assets = Net income / Total assets

Return on Assets = 1,719,000 / 14,100,000

Return on Assets = 0.1219 or 12.19%

3)

Shareholder's equity = Total assets - total debt

Shareholder's equity = 14,100,000 - 4,900,000

Shareholders equity = 9,200,000

Return on equity = Net income / Shareholders equity

Return on equity = 1,719,000 / 9,200,000

Return on equity = 0.1868 or 18.68%

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