In 2015, Jake\'s Jamming Music, Inc., announced an ROA of 8.48 percent, ROE of 1
ID: 2727018 • Letter: I
Question
In 2015, Jake's Jamming Music, Inc., announced an ROA of 8.48 percent, ROE of 13.70 percent, and profit margin of 9.7 percent. The firm had total assets of $8.7 million at year-end 2015. Calculate the 2015 value of net income available to common stockholders for Jake’s Jamming Music, Inc. (Enter your answers in dollars not in millions and round to the nearest whole dollar.)
Net income $
Calculate the 2015 value of common stockholders’ equity for Jake’s Jamming Music, Inc. (Round your answer to the nearest dollar amount.) Common stockholders’
equity $
Calculate the 2015 value of net sales for Jake’s Jamming Music, Inc. (Round your answer to the nearest dollar amount.)
Net sales $
Explanation / Answer
1.
Return on Assets = Net Income / Total Assets
Return on Assets = 8.48%
Total Assets = $8.70million
0.0848 = X / 8,700,000
X = 8,700,000 x 0.0865 = 737760
Net Income = $737760
2.
Return on Equity = Net Income / Stockholder's Equity
13.70% = 737760 / X
X = 737760 / 0.1370
Common Stockholder's Equity = $5385109
3.
Net Sales = Net Income / Profit Margin
Net Sales = 737760 / 0.0970
Net Sales = $7605773
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