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- Define profitability raitos return on assets and return on equity. According to the following metrics: ROA Return on Assets: 14%; ROE Return on Equity: 305%. What is the profitability the of example company? Why or why not is this company profitable?Which of the following ratios is used to measure the profit earned on each dollar invested in a firm?a. return on sales ratio c. current ratiob. return on equity d. asset turnover ratioScranton Paper Company generates $.97 in sales for every $1 invested in total assets. Which one of the following ratios would reflect this relationship? Multiple Choice Receivables turnover Equity multiplier Profit margin Return on assets
- 1. The Wilson Corporation has the following relationships:Sales/Total assets 2.0Return on assets (ROA) 4.0%Return on equity (ROE) 6.0%What is Wilson’s profit margin and debt ratio?Which of the following statements are true about profitability ratios? Check all that apply. If a company has a net profit margin of 10%, it means that the company earned a net income of $0.10 for each dollar of sales. If a company’s operating margin increases but its profit margin decreases, it could mean that the company paid more in interest or taxes. An increase in the return on assets ratio implies an increase in the assets a firm owns. If a company issues new common shares but its net income does not increase, return on common equity will increase.What is the difference between operating income, net income and other comprehensive income? If a company has a revenue of 2.2million and operating income of $120,000. Does the company has a high operating income margin?
- Calculating Profitability Ratios Wims, Inc., has sales of $15.2 million, total assets of $9.8 million, and total debt of $3.7 million. If the profit margin is 6 percent, what is the net income? What is the ROA? What is the ROE?A. What is the company’s gross profit margin?B. What is the company’s inventory turnover?C. What is the company’s current ratio?D. What is the company’s return on asset?E. What is the company’s net profit margin? F. What is the company’s days receivable?G. What is the company’s quick ratio?If Roten Rooters, Inc., has an equity multiplier of 1.58, total asset turnover of 1.80, and a profit margin of 6.8 percent, what is its ROE?
- RY Corporation had a profit margin of 6.25%, a total assets turnover of 1.5, and an equity multiplier of 1.8. What was the firm’s return on equity?Midwest Lumber had a profit margin of 5.1%, a total assets turnover of 1.6, and an equity multiplier of 1.8. What was the firm's ROE?5. Profitability ratios Profitability ratios help in the analysis of the combined impact of liquidity ratios, asset management ratios, and debt management ratios on the operating performance of a firm. Your boss has asked you to calculate the profitability ratios of Diusitech Inc. and make comments on its second-year performance as compared with its first-year performance. The following shows Diusitech Inc.'s income statement for the last two years. The company had assets of $4,700 million in the first year and $7,518 million in the second year. Common equity was equal to $2,500 million in the first year, and the company distributed 100% of its earnings out as dividends during the first and the second years. In addition, the firm did not issue new stock during either year. Diusitech Inc. Income Statement For the Year Ending on December 31 (Millions of dollars) Year 2 Year 1 2,540 2,000 1,610 1,495 127 80 1,737 803 80 723 181 542 Net Sales Operating costs except depreciation and…