Keller Cosmetics maintains an operating profit margin of 8% and a sales-to-assets ratio of 3. It has assets of $500,000 and equity of $300,000. Assume that interest payments are $30,000 and the tax rate is 25%. a. What is the return on assets? (Enter your answer as a percent rounded to 2 decimal places.) b. What is the return on equity? (Enter your answer as a percent rounded to 2 decimal places.)
Keller Cosmetics maintains an operating profit margin of 8% and a sales-to-assets ratio of 3. It has assets of $500,000 and equity of $300,000. Assume that interest payments are $30,000 and the tax rate is 25%. a. What is the return on assets? (Enter your answer as a percent rounded to 2 decimal places.) b. What is the return on equity? (Enter your answer as a percent rounded to 2 decimal places.)
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
Practice Pack
answers to Q2
Keller Cosmetics maintains an operating profit margin of 8% and a sales-to-assets ratio of 3. It has assets of $500,000 and equity of $300,000. Assume that interest payments are $30,000 and the tax rate is 25%.
a. What is the
b. What is the
Transcribed Image Text:Exercise n°2.
Keller Cosmetics maintains an operating profit margin of 8% and a
sales-to-assets ratio of 3. It has assets of $500,000 and equity of
$300,000. Assume that interest payments are $30,000 and the tax
rate is 25%.
a. What is the return on assets? (Enter your answer as a percent
rounded to 2 decimal places.)
b. What is the return on equity? (Enter your answer as a percent
rounded to 2 decimal places.)
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Includes step-by-step video
Trending now
This is a popular solution!
Learn your way
Includes step-by-step video
Step by step
Solved in 3 steps
Follow-up Questions
Read through expert solutions to related follow-up questions below.
Follow-up Question
Operating profit margin = 8.65%
Sales to assets ratio = 3.20
Assets = 630,000
Equity = 430,000
Interest payments = 43,000
Tax Rate = 40%
What Is
Solution
by Bartleby ExpertKnowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education