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Profit Margin

The Merriam Company has determined that its return on equity is 15 percent. Management is interested in the various components that went into this calculation. You are given the following information: total debt/total assets = 0.35 and total assets turnover = 2.8. What is the profit margin?

Solution Preview

Let us put the various figures
ROE=Net Income/Total Equity=15%
Total Debt/Total Assets=0.35
Asset Turnover=Sales/Assets=2.8

Total ...

Solution Summary

The solution explains the calculation of profit margin given some other ratios