Ratio Analysis The following is from the financial statements of Positive Play Sporting Goods, Inc. In millions ($US) 20X3 Sales: 876.52 Net income: 44.84 Total assets: 697.16 Equity: 432.91 Calculate the following ratios from the financial data provided: 1. Profit Margin 2. Total Asset Turnover 3. Return on Assets (ROA) 4. Equity Multiplier (Financial Leverage) 5. Return on Equity (ROE) Critique the performance of the company based on the outcomes from the ratios. What actions would you take to increase ROA and ROE in the future? Explain how they will impact shareholder value.
Added by Alan B.
Step 1
Profit Margin = Net Income / Sales Profit Margin = 44.84 / 876.52 Profit Margin = 0.0512 Step 2: Calculate the Total Asset Turnover Total Asset Turnover is calculated by dividing the sales by the total assets. Total Asset Turnover = Sales / Total Show more…
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