In 2012, Jake\'s Jamming Music, Inc., announced an ROA of 8.61 percent, ROE of 1
ID: 2815272 • Letter: I
Question
In 2012, Jake's Jamming Music, Inc., announced an ROA of 8.61 percent, ROE of 15.00 percent, and profit margin of 17.5 percent. The firm had total assets of $10.0 million at year-end 2012.
Calculate the 2012 value of net income available to common stockholders for Jake’s Jamming Music, Inc.
Calculate the 2012 value of common stockholders’ equity for Jake’s Jamming Music, Inc.
Calculate the 2012 value of net sales for Jake’s Jamming Music, Inc.
Calculate the 2012 value of net sales for Jake’s Jamming Music, Inc.
Explanation / Answer
Answer:
Return on Assets = Net Income available to Common Stockholders / Total Assets * 100
8.61 = Net Income available to Common Stockholders / 10,000,000 * 100
Net Income available to Common Stockholders = $861,000
Return on Equity = Net Income available to Common Stockholders / Common Stockholders’ Equity * 100
15.00 = 861,000 / Common Stockholders’ Equity * 100
Common Stockholders’ Equity = $5,740,000
Profit Margin = Net Income / Sales * 100
17.50 = 861,000 / Sales * 100
Sales = $4,920,000
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