Final answer:
a. The firm's return on assets if the Easter Egg and Poultry Company has $1,840,000 in assets, $625,000 in debt and it reports net income of $145,000 is 7.88%.
Return on assets: 7.88%
b. Tts return on stockholders' equity is 11.93%.
Return on equity: 11.93%
Step-by-step explanation:
To calculate the return on assets (ROA) for the Easter Egg and Poultry Company, you divide the net income by the total assets. The formula is as follows:
ROA = (Net Income / Total Assets) x 100
For the Easter Egg and Poultry Company, the calculation is:
ROA = ($145,000 / $1,840,000) x 100 = 7.88%
Thus, the firm's return on assets is 7.88 percent.
To find the return on stockholders' equity (ROE), you need to calculate the equity by subtracting the debt from the total assets and then dividing the net income by the equity. The formula is:
ROE = (Net Income / Stockholders' Equity) x 100
The equity for the company is $1,840,000 - $625,000 = $1,215,000, therefore the calculation for ROE is:
ROE = ($145,000 / $1,215,000) x 100 = 11.93%
Thus, the firm's return on stockholders' equity is 11.93 percent.
Your question is incomplete, but most probably your full question was
Easter Egg and Poultry Company has $1,840,000 in assets and $625,000 of debt. It reports net income of $145,000
a. What is the firm's return on assets? (Enter your answer as a percent rounded to 2 decimal places.)
Return on assets: _________
b. What is its return on stockholders' equity? (Enter your answer as a percent rounded to 2 decimal places.)
Return on equity: _________