Answer:
ROE = 6.25%
ROA = 3.57%
Explanation:
Sales = 50 million
Net Profit margin = 5%
Net profit = 50 million x 5% = 2.5 million
Total Assets = Total Equity + Total Liabilities
Total Assets = 40 million + 30 million = 70 million
Return on Equity = Net Profit / Total equity
Return on Equity = $2.5 million / $40 million = 0.0625 = 6.25%
Return on Assets = Net profit / total Asset
Return on Assets = 2.5 million / 70 million = 0.0357 = 3.57%
