Question

g Assume you are given the following relationships for the Haslam Corporation: Sales/total assets1.6 Return on assets (ROA)4% Return on equity (ROE)7% Calculate Haslam's profit margin and liabilities-to-assets ratio. Do not round intermediate calculations. Round your answers to two decimal places. Profit margin: % Liabilities-to-assets ratio: %

Answer 1

Profit margin % = 2.5%, Liabilities-to-assets ratio % = 42.86%

Step-by-step explanation:

Profit margin % = Return on assets (ROA)/(Sales/total assets)

Profit margin % = 4% / 1.6

Profit margin % = 0.025

Profit margin % = 2.5%

Liabilities-to-assets ratio % = 1 - ROA/ROE

Liabilities-to-assets ratio % = 1 - 4%/7%

Liabilities-to-assets ratio % = 1 - 0.57143

Liabilities-to-assets ratio % = 0.42857

Liabilities-to-assets ratio % = 42.86%