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...

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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.

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