Question

Sunland Systems has total assets of $26.680 billion, total debt of $8.685 billion, and net sales of $23.000 billion. Its net profit margin for the year is 19 percent, while the operating profit margin is 29 percent. What are Sunland’s net income, EBIT ROA, ROA, and ROE? (Round net income to 3 decimal places, e.g. 25.335. Round EBIT ROA, ROA and ROE to 1 decimal place, e.g.12.2%.)

Net Income $ billion

EBIT ROA %   

ROA %

ROE %

Answer 1

Net sales = $23.000 billion

a). Net income = net Sales*Net profit Margin

= $23.000 billion*19%

= $4.370 billion

b). EBIT or Operating Income = Net sales*Operating Profit margin

= $23.000 billion*29%

= $6.670 billion

EBIT ROA = EBIT/Total Assets

= $6.670 billion/$26.680 billion

= 25%

c). ROA = Net income/Total Assets

= $4.370 billion/$26.680 billion

= 16.38%

d). Total Equity = Total Assets - Total debt

= $26.680 billion - $8.685 billion

= $17.995 billion

ROE = Net income/Total Equity

= $4.370 billion/$17.995 billion

= 24.28%

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