Assume you are given the following relationships for the Haslam Corporation: Sales/total assets - 1.9 Return on assets (ROA) - 4% Return on equity (ROE) - 6%Calculate Haslam's profit margin and liabilities-to-assets ratio. Suppose half its liabilities are in the form of debt. Calculate the debt-to-assets ratio.

Question

Jarrett Esparza

Business

27 May, 19:46

Assume you are given the following relationships for the Haslam Corporation: Sales/total assets - 1.9 Return on assets (ROA) - 4% Return on equity (ROE) - 6%Calculate Haslam's profit margin and liabilities-to-assets ratio. Suppose half its liabilities are in the form of debt. Calculate the debt-to-assets ratio.

+4

Answers (1)

Know the Answer?

Holden Hardin · Answer 1

Profit margin = 2.11%

Haslam's liabilities-to-assets ratio = 33.33%

Debt-to-assets ratio = 16.50%

Explanation:

Calculate Haslam's profit margin. / total assets)

Profit margin = 4%/1.9

Profit margin = 2.11%

Calculate Haslam's liabilities-to-assets ratio.

Haslam's liabilities-to-assets ratio = 1 - ROA/ROE

Haslam's liabilities-to-assets ratio = 1 - 4/6

Haslam's liabilities-to-assets ratio = 33.33%

Suppose half of Haslam's liabilities are in the form of debt.

Debt-to-assets ratio = Haslam's liabilities-to-assets ratio = 0.33

Debt-to-assets ratio = 50%*0.33

Debt-to-assets ratio = 16.50%