Question:
Barnes Appliances has sales of $10,000,000, net income of $450,000, total assets of $4,000,000, and stockholders’ equity of $2,000,000.
a. What is the profit margin?
b. What is the return on assets?
c. What is the return on equity?
d. The debt-to-assets ratio is currently 50 percent. If it were 60 percent, what would the return on equity be? To answer this question, use Formula 3 b in the text.