Assume you are given the following relationships for the Warner Corporation: Sales / Total assets 1.2× Return on assets (ROA) 3.95% Return on equity (ROE) 7.70% Calculate Warner’s profit margin. a. 4.74% b. 9.24% c. 3.29% d. 1.95% e. 6.42%
Financial Ratios
A Ratio refers to a figure calculated as a reference to the relationship of two or more numbers and can be expressed as a fraction, proportion, percentage, or the number of times. When the number is determined by taking two accounting numbers derived from the financial statements, it is termed as the accounting ratio.
Return on Equity
The Return on Equity (RoE) is a measure of the profitability of a business concerning the funds by its stockholders/shareholders. ROE is a metric used generally to determine how well the company utilizes its funds provided by the equity shareholders.
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Assume you are given the following relationships for the Warner Corporation:
Sales / Total assets 1.2×
Return on assets (ROA) 3.95%
Return on equity (ROE) 7.70%
Calculate Warner’s profit margin.a. 4.74%
b. 9.24%
c. 3.29%
d. 1.95%
e. 6.42%
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