The operating profit margin was 13 percent for XYZ, Inc. in 2018, and it had $60 million in sales, $ $49 million of total assets, and $ 17 million of total liabilities. 7 percent is the interest rate for the company's debt, and tax rate is 21 percent. Calculate the company's operating income, net income, operating return on assets and return on equity

operating income 7,800,000

net income 5,221,900

operating ROA: 15.91%

ROE : 16.32%

Explanation:

operating income

sales x operating profit margin

60,000,000 x 13% = 7,800,000

Now, to get net income we must subtract interest and taxes:

interest: 17,000,000 debt x 7% = 1,190,000

Earnings before taxes: 7,800,000 - 1,190,000 = 6,610,000

And now we apply taxes: 6,610,000 (1 - 21%) = 5,221,900

operating return on assets: operating income / total assets

7,800,000 / 49,000,000 = 0,1591836734693878 = 15.91%

return on equity:

net income / equity

equity is solve using the accounting equation:

assets = liab + equity

49,000,000 - 17,000,000 = equity = 32,000,000

5,221,900 / 32,000,000 = 0,163184375‬ = 16.32%