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The following information is from the 2011 annual report of Weber Corporation, a company that supplies manufactured parts to the household appliance industry.
Average interest - bearing debt 20,000,000
Average other liabilities 2,250,000
Average shareholders' equity 12,250,000
Sales 49,000,000
Interest expense 800,000
Net income 2,450,000
1. Compute Weber Corporation's return on assets (ROA) for 2011 using a combined federal and state income tax rate of 40% where needed.
2. Compute the profit margin and asset turnover components of ROA for 2011.
3. Weber's management believes that various business initiatives will produce an asset turn-over rate of 2.25 next year. If the profit margin next year is unchanged from 2011, what will be the company's ROA?
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Solution Summary
The expert computes Weber Corporation's return on assets for 2011 using a combined federal and state income tax rate of 40%. A computation of profit margin and asset turnover compounds of ROA are given.
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The following information is from the 2011 annual report of Weber Corporation, a company that supplies manufactured parts to the household appliance industry.
Average interest - bearing debt 20,000,000
Average other liabilities 2,250,000
Average shareholders' equity 12,250,000
Sales ...
Purchase this Solution
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