Keller Cosmetics maintains an operating profit margin of 5% and asset turnover ratio of 3. a. What is its ROA? (Round your answer to 2 decimal places.) ROA 15.00 % b. If its debt-equity ratio is 1, its interest payments and taxes are each $8,000, and EBIT is $20,000, what is its ROE? (Do not round intermediate calculations. Round your answer to 2 decimal places.) ROE %

Keller Cosmetics maintains an operating profit margin of 5% and asset turnover ratio of 3. a. What is its ROA? (Round your answer to 2 decimal places.) ROA 15.00 % b. If its debt-equity ratio is 1, its interest payments and taxes are each $8,000, and EBIT is $20,000, what is its ROE? (Do not round intermediate calculations. Round your answer to 2 decimal places.) ROE %

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Keller Cosmetics maintains an operating profit margin of 6% and asset turnover ratio of 1. a. What is its ROA? (Enter your answer as a whole percent.) ROA % b. If its debt-equity ratio is 1, its interest payments are $9,700 and taxes are $11,400, and EBIT is $28,500, what is its ROE? (Do not round intermediate calculations. Enter your answer as a whole percent.) ROE %
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Du Pont Analysis. Keller Cosmetics maintains an operating profit margin of 5% and asset turnover ratio of 3. a. what is ROA? b. If its debt-equity ratio is 1, its interest payments and taxes are each 8000, and EBIT is 20,000 what is its ROE? * I know ROA is Asset Turnover x OPM which gives me .15. How do I analyze this? Is it for every dollar spent on assets you get a return of 15%. Also How do I solve for b. Please give me step by step instructions. For the ROE, I was able to solve for NI given the EBIT, Interest Pay, and Tax. This is 4000. However I don't know how to solve for equity to find ROA. Can you give me step by step instructions/full explanations on how to calculate equity?
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