DTO, Inc., has sales of $20 million, total assets of $18.2 million, and total debt of $9.1 million. Assume the profit margin is 9 percent.
DTO, Inc., has sales of $20 million, total assets of $18.2 million, and total debt of $9.1 million. Assume the profit margin is 9 percent.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Problem 3-2 Calculating Profitability Ratios [LO2]
DTO, Inc., has sales of $20 million, total assets of $18.2 million, and total debt of $9.1 million. Assume the profit margin is 9 percent. |
a. | What is the company's net income? (Do not round intermediate calculations. Enter your answer in dollars not in millions, e.g., 1,234,567.) |
b. | What is the company's ROA? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) |
c. | What is the company's ROE? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) |
Expert Solution
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Step 1
a. Net income = Profit margin * Sales = 0.09 * $20,000,000 = $1,800,000
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