Question

Denver, incorporated, has sales of $18.5 million, total assets of $13.5 million, and total debt of $4.3 million. the profit margin is 8 percent.percent.

What is the company's net income? (Enter your answer in dollars, not millions of dollars, e.g., 1,234,567. Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)
Net income $
What is the company's ROA? (Do not round intermediate calculations and enter your answer as a percent rounded 2 decimal places, e.g., 32.16.)
ROA %
What is the company's ROE? (Do not round intermediate calculations and enter your answer as a percent rounded 2 decimal places, e.g., 32.16.)
ROE %

Answer 1

The net income is $1,480,000. The company's ROA is 10.96% and the ROE is 17.05%.

Step-by-step explanation:

To calculate the net income of a company, you need to multiply the profit margin by the sales revenue. In this case, the profit margin is 8%, so the net income can be calculated as $18.5 million x 0.08 = $1.48 million. Therefore, the company's net income is $1,480,000.

The Return on Assets (ROA) is a measure of how efficiently a company is using its assets to generate profits. It is calculated by dividing the net income by the total assets and multiplying by 100. Using the given values, the ROA can be calculated as ($1.48 million / $13.5 million) x 100 = 10.96%. Therefore, the company's ROA is 10.96%.

The Return on Equity (ROE) is a measure of how well a company is generating returns for its shareholders. It is calculated by dividing the net income by the total equity (total assets - total debt) and multiplying by 100. Using the given values, the ROE can be calculated as ($1.48 million / ($13.5 million - $4.3 million)) x 100 = 17.05%. Therefore, the company's ROE is 17.05%.