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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.

FINANCIAL ACCOUNTING
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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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.
Transcribed Image Text: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.
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