X Enterprises has the following comparative balance sheets and income statements
1.) What is the Earnings Before Interest?
2.) What is the Profit Margin ratio used in ROA?
3) What is the Return on Assets?
Solution
Earning before interest = Revenue - Operating Expenses. (100-80=20)
Profit Margin ration = Net Income/Net Sales. (9.8/214=0.45)
Return on Asset = Net Income/Total Asset. (9.8/5.6=1.75)
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X Enterprises has the following comparative balance sheets and income.docx
1. X Enterprises has the following comparative balance sheets and income statements
1.) What is the Earnings Before Interest?
2.) What is the Profit Margin ratio used in ROA?
3) What is the Return on Assets?
Statement
of Financial
Position
Income Statement
for the year ending
December 31, 12
Dec 31, 12 Dec 31, 11 Revenues $100.0
Total Assets $120 $100 Operating expenses 80.0
Total Liabilities 70 60 Interest Expense 6.0
Shareholders' equity 50 40 Income before Taxes 14.0
Tax Expense (30%) 4.2
Net Income 9.8
Solution
Earning before interest = Revenue - Operating Expenses. (100-80=20)
Profit Margin ration = Net Income/Net Sales. (9.8/214=0.45)
Return on Asset = Net Income/Total Asset. (9.8/5.6=1.75)