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4 November, 10:39

Assume you are given the following relationships for the Haslam Corporation: Sales/total assets - 1.9 Return on assets (ROA) - 4% Return on equity (ROE) - 6%Calculate Haslam's profit margin and liabilities-to-assets ratio. Suppose half its liabilities are in the form of debt. Calculate the debt-to-assets ratio.

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  1. 4 November, 12:32
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    Profit margin = 2.11%

    Haslam's liabilities-to-assets ratio = 33.33%

    Debt-to-assets ratio = 16.50%

    Explanation:

    Calculate Haslam's profit margin. / total assets)

    Profit margin = 4%/1.9

    Profit margin = 2.11%

    Calculate Haslam's liabilities-to-assets ratio.

    Haslam's liabilities-to-assets ratio = 1 - ROA/ROE

    Haslam's liabilities-to-assets ratio = 1 - 4/6

    Haslam's liabilities-to-assets ratio = 33.33%

    Suppose half of Haslam's liabilities are in the form of debt.

    Debt-to-assets ratio = Haslam's liabilities-to-assets ratio = 0.33

    Debt-to-assets ratio = 50%*0.33

    Debt-to-assets ratio = 16.50%
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