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    Lily Cosmetics

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    Please verify and explain

    Lily Cosmetics has annual sales of $500,000,000

    maintains a net after tax profit margin of 5%
    and has a sales-to-assets ratio of 4

    a. What is its return on assets?

    b. If its debt/equity ratio is 0.5 , what is the return on equity?

    My answers are:
    A. 250,000,000
    b. 4:1

    Am I correct? If not please explain where I went wrong.

    © BrainMass Inc. brainmass.com June 3, 2020, 6:29 pm ad1c9bdddf

    Solution Preview

    Your answers are not correct. You have to calculate the return on assets and equity. The return is expressed as a percentage and is a percentage of net income.

    See below the calculations

    Annual Sales = $500 million
    Profit Margin = Net ...

    Solution Summary

    The solution explains the calculation of return on assets and debt/equity ratio for Lily Cosmetics