Need assistance in solving these problems:
Problem 1. Given the following financial data: net income/sales = 5%; sales/total assets = 2.5; debt/total assets = 60 percent; compute:
a. Return on assets.
b. Return on equity.
Problem 2. Explain in problem 1 why return on equity was so much higher than return on assets.
Problem 3. A firm has assets of $1,200,000 and turns over two times per year. Return on assets is 15%. What is its profit margin (return on sales)?