Please help wth the following:
Felton Beverages maintains a profit margin of 4 percent and a sales-to-assets ratio of 3.
A. What is its return on assets?
B. If its debt-equity ratio is 1.0, its interest payments and taxes are each $10,000, and EBIT is $40,000, what is the return on equity?
Thank you for your assistance.© BrainMass Inc. brainmass.com March 4, 2021, 6:22 pm ad1c9bdddf
Profit Margin =4% this implies Net Income/Sales = 4%
Sales/Assets = 3
a. Return on Assets = Net Income / Assets
(Net Income/Sales) X ( Sales / Assets)
= 0.04 X 3
b. The debt equity ...
The solution explains how to calculate the return on equity and assets given some ratios.