Foundations of Financial Management
16th Edition
ISBN: 9781259277160
Author: Stanley B. Block, Geoffrey A. Hirt, Bartley Danielsen
Publisher: McGraw-Hill Education
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Chapter 3, Problem 4P
Summary Introduction
To calculate: The profit margin of Billy’s Crystal Stores Inc.
Introduction:
Profit Margin:
Also called return on sales, profit margin is a ratio that helps determine the profit that a firm is able to generate through sales. It can be computed by dividing the firm’s net income by its net sales.
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Damietta Furniture Corporation has a net profit margin of 15% and a total asset turnover of 1.7.
What is Damietta Furniture's return on total assets (ROA)?
Select one:
O a. 11.1%
O b. 12.3%
c. 8.8%
O d. 25.5%
Keller Cosmetics maintains an operating profit margin of 8.15% and a sales-to-assets ratio of 3.20. It has assets of $530,000 and equity
of $330,000. Assume that interest payments are $33,000 and the tax rate is 30%.
a. What is the return on assets?
b. What is the return on equity?
Note: For all requirement, enter your answers as a percent rounded to 2 decimal places.
a. Return on assets
b. Return on equity
%
%
Keller Cosmetics maintains an operating profit margin of 5% and asset turnover ratio of
6.
a. What is its ROA? (Enter your answer as a whole percent.)
ROA
20 %
If its debt-equity ratio is 1, its interest payments are $9,600 and taxes are $11,200, and
b. EBIT is $28,000, what is its ROE? (Do not round intermediate calculations. Enter
your answer as a whole percent.)
ROE
15.56 %
Chapter 3 Solutions
Foundations of Financial Management
Ch. 3 - If we divide users of ratios into short-term...Ch. 3 - Explain how the Du Pont system of analysis breaks...Ch. 3 - If the accounts receivable turnover ratio is...Ch. 3 - Prob. 4DQCh. 3 - Is there any validity in rule-of-thumb ratios for...Ch. 3 - Why is trend analysis helpful in analyzing ratios?...Ch. 3 - Inflation can have significant effects on income...Ch. 3 - What effect will disinflation following a highly...Ch. 3 - Why might disinflation prove favorable to...Ch. 3 - Comparisons of income can be very difficult for...
Ch. 3 - Low Carb Diet Supplement Inc. has two divisions....Ch. 3 - Database Systems is considering expansion into a...Ch. 3 - Prob. 3PCh. 3 - Prob. 4PCh. 3 - Prob. 5PCh. 3 - Dr. Zhivà€go Diagnostics Corp.’s income...Ch. 3 - The Haines Corp. shows the following financial...Ch. 3 - Easter Egg and Poultry Company has $2,000,000 in...Ch. 3 - Prob. 9PCh. 3 - Prob. 10PCh. 3 - Baker Oats had an asset turnover of 1.6 times per...Ch. 3 - AllState Trucking Co. has the following ratios...Ch. 3 - Front Beam Lighting Company has the following...Ch. 3 - Prob. 14PCh. 3 - Prob. 15PCh. 3 - Jerry Rice and Grain Stores has $4,780,000 in...Ch. 3 - Prob. 17PCh. 3 - Prob. 18PCh. 3 - Prob. 19PCh. 3 - Prob. 20PCh. 3 - Jim Short’s Company makes clothing for schools....Ch. 3 - The balance sheet for Stud Clothiers is shown...Ch. 3 - The Lancaster Corporation’s income statement is...Ch. 3 - Prob. 24PCh. 3 - Prob. 25PCh. 3 - Prob. 26PCh. 3 - Prob. 27PCh. 3 - Prob. 28PCh. 3 - The Global Products Corporation has three...Ch. 3 - Prob. 30PCh. 3 - Prob. 31PCh. 3 - Prob. 32PCh. 3 - Prob. 33PCh. 3 - Prob. 34PCh. 3 - The following information is from Harrelson...Ch. 3 - Using the financial statements for the Snider...Ch. 3 - Given the financial statements for Jones...
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