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Calculating Net Income, Return on Assets, Return on Equity

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Diamond Eyes, Inc., has sales of $16 million, total assets of $14.1 million, and total debt of $8.2 million. Assume the profit margin is 6 percent.

What is net income? (Enter your answer in dollars not in millions, i.e. 1,234,567.)

Net income $

What is ROA? (Round your answer to 2 decimal places. (e.g., 32.16))


What is ROE? (Round your answer to 2 decimal places. (e.g., 32.16))


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Solution Summary

The solution gived detailed steps on calculating the net income, Return on Assets and Return on Equity. All formula and calculations are shown and explained.

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Calculate Return on Equity & Profit Margin

Part 1

You are given the following information about a firm: The growth rate equals 8 percent; return on assets (ROA) is 10 percent; the debt ratio is 20 percent; and the stock is selling at $36. What is the return on equity (ROE)?

Part 2

Retailers Inc. and Computer Corp. each have assets of $10,000 and a return on common equity equal to 15%. Retailers has twice as much debt and twice as many sales relative to Computer Corp. Retailers' net income equals $750, and its total asset turnover is equal to 3. What is Computer Corp.'s profit margin?

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