Task:
The following information is from the 2011 annual report of Weber Corporation, a company that supplies manufactured parts to the household appliance industry.
Average interest - bearing debt 20,000,000
Average other liabilities 2,250,000
Average shareholders' equity 12,250,000
Sales 49,000,000
Interest expense 800,000
Net income 2,450,000
Problem 1. Compute Weber Corporation's return on assets (ROA) for 2011 using a combined federal and state income tax rate of 40% where needed.
Problem 2. Compute the profit margin and asset turnover components of ROA for 2011.
Problem 3. Weber's management believes that various business initiatives will produce an asset turn-over rate of 2.25 next year. If the profit margin next year is unchanged from 2011, what will be the company's ROA?