During the last year, a company had sales of $300,000 and a net income of $20,000, and its year-end assets were $200,000. The firm's total debt to total assets. ratio was 40%. Based on the DuPont equation, what was the firm's ROE?

During the last year, a company had sales of $300,000 and a net income of $20,000, and its year-end assets were $200,000. The firm's total debt to total assets. ratio was 40%. Based on the DuPont equation, what was the firm's ROE?

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter7: Analysis Of Financial Statements

Section: Chapter Questions

Problem 12P: The Kretovich Company had a quick ratio of 1.4, a current ratio of 3.0, a days’ sales outstanding of...

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During the last year, a company had sales of $300,000
and a net income of $20,000, and its year-end assets
were $200,000. The firm's total debt to total assets.
ratio was 40%. Based on the DuPont equation, what
was the firm's ROE?

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Last year Harrington Inc. had sales of $325,000 and a net income of $19,000, and its year-end assets were $240,000. The firm's total-debt-to-total-capital ratio was 32.5%. The firm finances using only debt and common equity, and its total assets equal total invested capital. Based on the DuPont equation, what was the ROE? Do not round your intermediate calculations. Ⓒa. 11.73% b. 17.38% O c. 5.85% d. 8.66% e. 7.92%
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