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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 Preview

    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 ...

    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.

    $2.19

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