Answer: profit margin ratio = 0.03 and dept ratio = 1.73
Explanation:
Net ratio/total assets means assets turnover which is equal to 3
ROA = profit margin × assets turnover
ROA = 9.3% = 0.093
ROA = profit margin × 3
Profit margin = 0.093/3
Profit margin = 0.031
Also,
ROE = ROA × dept - equity margin ratio
Dept-equity margin ratio means dept ratio.
Dept ratio = ROE/ROA
Dept ratio = 16.1/9.3 = 1.731
Answer:
Profit margin = 3.10% Debt Ratio = 0.42%
Explanation:
Gross profit margin represents the gross profits generated from every dollar in sales
Debt ratio measures the amount of debt a firm has used to finance it operations
First compute the equity multiplier
given by = ROE/ROA
= 16.1%9.30%
1.73
From the equity multiplier compute the debt ratio
DR = 1- 1/Equity multiplier
=1-1/1.69
=0.42
from the information given the ROE formula according to du point analysis can be used
ROE = Profit margin × asset turnover × equity multiplier
16.1 =Profit Margin ×3 × 1.73
Profit margin = 16.1/3*1.73
=3.10%
