The Carla Vista Timber Company has the following ratios: Net sales/Total assets = 3.00; ROA = 9.30%; ROE = 16.1%. What are Carla Vista's profit margin and debt ratios? (Round answers to 2 decimal places, e. g. 12.55 or 12.55%.)

Question

Braylen Cole

Business

1 July, 13:59

The Carla Vista Timber Company has the following ratios: Net sales/Total assets = 3.00; ROA = 9.30%; ROE = 16.1%. What are Carla Vista's profit margin and debt ratios? (Round answers to 2 decimal places, e. g. 12.55 or 12.55%.)

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Answers (1)

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Brice · Answer 1

Answer: profit margin ratio = 0.03 and dept ratio = 1.73

Explanation:

Net ratio/total assets means assets turnover which is equal to 3

ROA = profit margin * assets turnover

ROA = 9.3% = 0.093

ROA = profit margin * 3

Profit margin = 0.093/3

Profit margin = 0.031

Also,

ROE = ROA * dept - equity margin ratio

Dept-equity margin ratio means dept ratio.

Dept ratio = ROE/ROA

Dept ratio = 16.1/9.3 = 1.731