The operating profit margin (EBIT/sales) of ABC, Inc. is 18%, its TATO ratio (Sales/TA) is 1.50x, and its sales are $3,000,000. ABC's ROE is double its return on assets (ROA). ABC pays 10% interest on all debt and its tax rate is 40%. Calculate the company's ROA and ROE.

The operating profit margin (EBIT/sales) of ABC, Inc. is 18%, its TATO ratio (Sales/TA) is 1.50x, and its sales are $3,000,000. ABC's ROE is double its return on assets (ROA). ABC pays 10% interest on all debt and its tax rate is 40%. Calculate the company's ROA and ROE.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter5: The Income Statement And The Statement Of Cash Flows

Section: Chapter Questions

Problem 1RE: Brandt Corporation had sales revenue of 500,000 for the current year. For the year, its cost of...

See similar textbooks

Related questions

Q: Adjusting Balance Sheet and Income Statement for Asset Disposal On its 2019 income statement,…

A: $102million gain is allocated equally over fiveyears(2015-2019) ,reversing $20.4 million annually.…

Q: Do not use Ai

A: Approach to solving the question: Know the formula. And then, use the formula to compute for the…

Q: help please answer in text form with proper workings and explanation for each and every part and…

A: Explanation: You should invest $36,111.11 now to have $39,000 at the end of one year, with an 8%…

Q: not use ai please

A: Given, Computation of missing amounts: Situation a: Supplies expense for current year = Total…

Q: Kolby Corp. is comparing two different capital structures. Plan I would result in 900 shares of…

A: The problem involves the determination of the Price per share of stocks under different debt capital…

Q: I want to answer this question

A: Step 1: Introduction to the Operating Cash FlowsThe flow of cash in the daily business by doing its…

Q: Let X be a random variable such that E[X] = μ, V[X] =σ², max[X] = My min(X) = m with 0 Not egual to…

A: 1) To analyze whether the statement is true, we need to first understand the process of…

Q: Provide correct answer for this question

A: Step 1: Introduction to the Gross Profit RateThe gross profit rate indicates the percentage of net…

Q: Need help with this question

A: Step 1:DuPont analysis represents us that ROE is affected by three things:- Operating efficiency,…

Q: Please help solve this question

A: If you have any problem let me know in comment box thankyou.

Q: Do not use chatgpt.

A: Disclosure Includes the Same Maturity Information Required Under ASC Topic 840:Reference: ASC…

Q: The following balances were taken from the books of Waterway Corp. on December 31, 2025. Interest…

A: The multiple-step income statement provides a comprehensive breakdown of Waterway Corp.'s…

Q: Need help

A: To find the present value of the net cash flows for a project, we can use the relationship between…

Q: None

A: This situation involves a lease agreement between Coronado Steel Company (the lessee) and the lessor…

Q: Provide help with this question

A: 5. Calculate the Earnings Per Share (EPS): EPS=Net Income/Number of Outstanding Shares The number of…

Q: Can you please give answer?

A: Step 1: Introduction to the Net Sales RevenueThe net sales revenue for a firm is computed by…

Q: Georgio owns a 30 percent profits and capital interest in Rain Tree LLC. For the current year, Rain…

A: a. How much ordinary business income (loss) is allocated to Georgio for the year?DescriptionTotal…

Q: Need help

A: Let's approach this step-by-step using the DuPont analysis formula. 1) First, recall the DuPont…

Q: I want correct answer

A: To estimate the total fixed costs for Chesapeake Co. in August, we can apply the high-low cost…

Q: Hi expart give correct answer

A: To compute the amount of the work in process (WIP) inventory on hand at year-end for Reliable Tool…

Q: Give true answer

A: Step 1:Calculation of the weighted average cost of capital (WACC) :Weighted average cost of capital…

Q: Need help please

A: Step 1: Identify the highest and lowest levels of activity.Step 2: Calculate the change in total…

Q: Berra, Inc. is currently considering a seven-year project that has an initial outlay or cost of…

A: The profitability index (PI) for the project is approximately 1.18. Since the PI is greater than 1,…

Q: Solve this question

A: Step 1: Introduction to the Static CostsStatic costs are the expenses that will remain as is even if…

Q: Need help

A: If you have any problem let me know in comment box thankyou.

Q: Need help

A: Step 1: Introduction to ratio analysisRatio analysis is a method used to analyze financial…

Q: not use ai please don't

A: ‏‏‎‏‏‎‏‏‎‏‏‏‏‏‏‏‏‎‏‏‎‏‏‎‏‏‏‏‏‏‏‏‎‏‏‎‏‏‎‏‏‏‏‏‏‏‏‎‏‏‎‏‏‎‏‏‏‏‏‏‏‏‎‏‏‎‏‏‎‏‏‏‏‏‏Options…

Q: Why some implementation success and some of them failed?

A: Understanding the Success and Failure of Strategy ImplementationThe implementation of strategies in…

Q: Prepare separate adjusting entries for any checks that require adjustment. (List all debit entries…

A: Step 1: Identify the specific account related to the check that requires adjustment.Determine…

Q: What is a good response to... Temporary financial statements, as regulated by the Financial…

A: To address the requirements of temporary financial statements as regulated by the Financial…

Q: aj.2 answer must be in table format or i wil give down vote [The following information applies to…

A: Explanation of Gross Income:Gross income is the total income earned by an individual before any…

Q: need help please provide correct answer

A: Step 1 : Define Price-Sales Ratio:The ratio can be computed by dividing the market price per share…

Q: Please answer this questions I need help on this questions from your accounting expert.…

A: In conclusion, both arbitration and mediation serve as valuable alternatives to litigation, each…

Q: Ocean City Kite Company sells kites for $9 per kite. In FY 2019, total fixed costs are expected to…

A: Step 1: Introduction to the Cost-Volume-Profit (CVP) Analysis:The CVP analysis is used to compute…

Q: Required information [The following information applies to the questions displayed below.) Wardell…

A: Given, Initial cost of the computer = $40000Initial useful life = 5 years Initial Residual value =…

Q: The business bought R450000 worth of inventory from various suppliers during the year. 80% of these…

A: The total amount of purchases made on credit can be calculated by multiplying the total purchases by…

Q: Need experts solution

A: Step 1Raw materials purchased and used =$3,130Wages of production workers = $3,570Salaries of…

Q: Need answer the question

A: Step 1: Definition of Ownership InterestOwnership interest is the possession of stocks, real estate,…

Q: None

A: totalcosts for the cutting and Sewing departments were determined using the reciprocal services…

Q: eht-take&inprogress=fa eBook Effect of Transactions on Accounting Equation David Segal started a…

A: First, we need to identify the transactions that occurred during the first month of David Segal's…

Q: Please answer this questions I need help on this questions from your accounting expect.…

A: The explanation is written in the answer.

Q: None

A: Operating cash flow = EBIT+depreciation-taxes Let us compute the EBIT. Ebit = revenue - variable…

Q: need answer of this question provide correct option with calculation

A: Step 1: Step 1: Identify the relevant informationNet profits after taxes (Net income): $200,000Total…

Q: Preparation of financial statements for a nonprofit Following are the preclosing fund trial balances…

A: ### Explanation of Financial Statements for a Nonprofit OrganizationIn nonprofit organizations,…

Q: need answer with this question

A: We have to determine the total amount Jillian will need to pay to move in. we can add the monthly…

Q: None

A: To calculate the patent amortization expense for the first year, we need to divide the total cost of…

Q: None

A: I understand you'd like help analyzing some financial information for Quigg Inc. and calculating…

Q: Draw resonance structures for the following compound: Add curved arrow(s) to show resonance using…

A: Detailed explanation:

Q: provide answer please give the correct answer

A: Step 1: Define Cost-Volume-Profit Analysis:In management accounting, the Cost-Volume-Profit Analysis…

Q: Acme Inc.'s total assets at the beginning of the year amount to $500,000,000, and its total assets…

A: To determine Acme Inc.'s net income for the year, we can use the Return on Assets (ROA) formula. The…

Question

Need help with this question

The operating profit margin (EBIT/sales) of ABC, Inc. is
18%, its TATO ratio (Sales/TA) is 1.50x, and its sales are
$3,000,000. ABC's ROE is double its return on assets
(ROA). ABC pays 10% interest on all debt and its tax rate
is 40%. Calculate the company's ROA and ROE.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step by step

Solved in 2 steps with 3 images

SEE SOLUTION Check out a sample Q&A here

Similar questions

Need answer
Give true answer
Keller Cosmetics maintains an operating profit margin of 8.15% and a sales-to-assets ratio of 3.20. It has assets of $530,000 and equity of $330,000. Assume that interest payments are $33,000 and the tax rate is 30%. a. What is the return on assets? b. What is the return on equity? Note: For all requirement, enter your answers as a percent rounded to 2 decimal places. a. Return on assets b. Return on equity % %
Humphrey Hotels' operating income (EBIT) is $40 million. The company's times interest earned (TIE) ratio is 8.0, its tax rate is 40 percent, and its basic earning power (BEP) ratio is 10 percent. What is the company's return on assets (ROA) (Ctrl) - carch
Lone Star Plastics has the following data:Total Assets: R100,000 ; Net Profit margin: 6.0%;Tax rate: 40% ; Debt ratio: 40.0% of which 30% is interest bearing debt;Interest rate: 8.0% : Total assets turnover: 3.0.Calculate Lone Star's EBIT (Earnings before Interest and Tax).
Answer please?
Keller Cosmetics maintains an operating profit margin of 8.25% and a sales-to-assets ratio of 3.40. It has assets of $550,000 and equity of $350,000. Assume that interest payments are $35,000 and the tax rate is 40%. a) What is the return on assets? b) What is the return on equity?
White Waters, Inc., has sales of $34 million, total assets of $48 million, and total debt of $11 million with a 6% average interest rate. If the profit margin is 13 percent, the ROA is ______ %. Round it to two decimal places.
What is keys' profit margin?
What is Highfield profit margin?
A manufacturing company has a profit margin of 12% on sales of $18,000,000. The firm has total assets of $25,000,000 and total debt of $8,000,000. The after-tax interest cost on total debt is 4.5%. What is the firm's Return on Assets (ROA)? A) 9.88% B) 8.64% C) 10.12% D) 7.92%
Byrgenwerth Corp has $55,000,000 of assets, and its tax rate is 28%. Its Basic Earning Power (BEP) ratio is 10%, and its Return on Assets (ROA) is 2%. What is its Times-Interest-Earned (TIE) ratio?