Need answer Sophia's Auto Shop has sales of $920,500,total assets of $815,300, and a profitmargin of 7.25 percent. The firm has atotal debt ratio of 50 percent. What isthe return on equity?A) 14.75 percentB) 15.22 percentC) 16.37 percentD) 13.88 percentE) 17.04 percent

1. Calculate Net Income:Net Income = Sales * Profit MarginNet Income = $920,500 * 0.0725Net Income =…

Answered: Sophia's Auto Shop has sales of…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter3: Evaluation Of Financial Performance

Section: Chapter Questions

Problem 2P

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Sophia's Auto Shop has sales of $920,500, total assets of $815,300, and a profit margin of 7.25 percent. The firm has a total debt ratio of 50 percent. What is the return on equity? A) 14.75 percent B) 15.22 percent C) 16.37 percent D) 13.88 percent E) 17.04 percent