Purchase Solution

Return on Equity

Not what you're looking for?

Ask Custom Question

Utilizing the following information on the Smithwick Company,compute the firm's return on equity.

Balance Sheet
(000s)

Current assets $1,500 Current liabilities $ 910
Fixed assets 7,000 Long-term liabilities 1,200
8,500 Common stock
(at par) 2,000
Paid in capital 1,000
Retained earnings 3,390
$8,500

Income Statement
(000s)

Net sales $ 12,750
Cost of sales 7,650
Gross margin $ 5,100
Operating expenses 3,165
Earnings before interest and taxes 1,935
Interest 235
Earnings before tax $1,700
Taxes (40%) 680
Earnings after tax $1,020

Purchase this Solution
Solution Summary

This solution is comprised of solution related with Return on Equity.

Solution provided by:
Jayant Kumar, MBA
Education
  • MBA, Indian Institute of Finance
  • Bsc, Madras University
Recent Feedback
  • "I've posted a similar question for another course. It's post 657940, and it's a practice problem that I'd like to use for the final exam. Your help will be greatly appreciated. "
  • "thank you!"
  • "Thank you again Jayant. You are super fast. "
  • "Thank you Jayant. You are appreciated. "
  • "Again, thank you Jayant. You are wonderful. "
Purchase this Solution
Free BrainMass Quizzes
Marketing Management Philosophies Quiz

A test on how well a student understands the basic assumptions of marketers on buyers that will form a basis of their marketing strategies.

Lean your Process

This quiz will help you understand the basic concepts of Lean.

Social Media: Pinterest

This quiz introduces basic concepts of Pinterest social media

Basic Social Media Concepts

The quiz will test your knowledge on basic social media concepts.

Team Development Strategies

This quiz will assess your knowledge of team-building processes, learning styles, and leadership methods. Team development is essential to creating and maintaining high performing teams.

View More Free Quizzes
Related BrainMass Solutions

  • Capital Structure and Leverage for a Locomotive Corporation

    Expected return on the equity of an otherwise identical all-equity firm = return on assets = 14.29% since there is no debt, Expected return on assets = Proportion of equity x Return on equity + Proportion of debt x Return on debt

  • Return on equity

    ) = Return on assets * Equity multiplier Where Net income / Total assets = Return on assets Total assets / Total equity = Equity multiplier Return on equity = 8%*1.4 = 11.2% Thank you Solution shows calculation of Return on equity.

  • Definition of Return on Equity

    Return on Equity is calculated by dividing $ 60,000 by $ 300,000 (average shareholders equity which is $ 315,000 + $ 285,000 / 2). This gives us a Return on Equity of 20%.

  • Return on Common Equity vs Total Assets

    142419 Return on Common Equity vs Total Assets Would you anticipate that a firm's Return on Common Equity would be smaller or larger than that same firm's Return on Total Assets?

  • Calculate Afton's return on assets and return on equity

    assets and return on equity.

  • Lily Cosmetics

    = 1.5 Equity Equity = Assets/1.5 = 125/1.5 = 83.33 Return on Equity = 25/83.33 = 30% The solution explains the calculation of return on assets and debt/equity ratio for Lily Cosmetics

  • Return on Equity Using Du Pont Analysis

    Return on equity =( Net Income /Sales) x (Sales / Assets ) x (Assets / Equity) Or Return on equity =Profit margin x Total asset turnover x Leverage Or Return on equity =5.5% x 2 x 2.2= 0.242 or 24.2% Answer: Return on equity=

  • Difference in return on equity for two companies

    Return on Equity = Net Income/Total Equity Barden has a Return on Equity of 11.1%. The Total Equity of Barden=Net Income/Return on Equity = 1/0.111 = $9 million. On the liabilities side, Barden has $1 million in debt and $9 million in equity.

  • Thomas Lane Company: calculate return on equity and return on equity ratio

    = 0.12 The expert calculate the return on equity and return on equity ratios.

  • Global Financial Management

    - Return on Equity vs.

View More Related Solutions