Question

Aquilera, Inc., has sales of $19.4 million, total assets of $14.4 million, and total debt of $5.2 million. The profit margin is 12 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

Net income= $2,328,000

ROA= 12%

ROE= 25.30%

Step-by-step explanation:

Aquilera incorporation has a sales of $19.4 million

The total assets is $14.4 million

The total debt is $5.2 million

The profit margin is 12%

The net income can be calculated as follows

= profit margin × sales

= 12/100 × 19,400,000

= 0.12 × 19,400,000

= $2,328,000

The ROA can be calculated as follows

= Net income/Average Sales

= 2,328,000/19,400,000

= 0.12 × 100

= 12%

The ROE can be calculated as follows

= Net income/Total equity

Total equity= Total assets - Total debt

= 14,400,000-5,200,000

= 9,200,000

= 2,328,000/9,200,000

= 0.2530 × 100

= 25.30%