In 2015, Jake\'s Jamming Music, Inc., announced an ROA of 8.62 percent, ROE of 1

Question

In 2015, Jake's Jamming Music, Inc., announced an ROA of 8.62 percent, ROE of 15.10 percent, and profit margin of 16.9 percent. The firm had total assets of $10.1 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.)

Calculate the 2015 value of common stockholders’ equity for Jake’s Jamming Music, Inc. (Round your answer to the nearest dollar amount.)

Calculate the 2015 value of net sales for Jake’s Jamming Music, Inc. (Round your answer to the nearest dollar amount.)

In 2015, Jake's Jamming Music, Inc., announced an ROA of 8.62 percent, ROE of 15.10 percent, and profit margin of 16.9 percent. The firm had total assets of $10.1 million at year-end 2015.

Explanation / Answer

Part A)

The net income available to common stockholders can be calculated with the use of following formula for ROA:

ROA = Net Income/Total Assets

Substituting the values provided in the question in the above formula, we get,

8.62% = Net Income/$10,100,000

Rearranging Values, we get,

Net Income Available to Common Stockholders = $870,620

________

Part B)

The value of common stockholder's equity can be calculated with the use of following formula for ROE as follows:

ROE = Net Income Available to Common Stockholders/Common Stockholder's Equity

Substituting the value of net income calculated above and other information provided in the question in the above formula, we get,

15.10% = 870,620/Common Stockholder's Equity

Rearranging Values, we get,

Common Stockholder's Equity = 870,620/15.10% = $5,765,695.36 or $5,765,695

________

Part C)

The value of net sales can be calculated with the use of following formula for Profit Margin as follows:

Profit Margin = Net Income/Net Sales

Substituting the value of net income calculated above and other information provided in the question in the above formula, we get,

16.9% = 870,620/Net Sales

Rearranging Value, we get,

Net Sales = 870,620/16.9% = $5,151,597.63 or $5,151,598

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