Reference no: EM133031011
Question - The following information is from the 20X1 annual report of Weber Corporation, a company that supplies manufactured parts to the household appliance industry.
Average total assets $24,500,000
Average interest-bearing debt 10,000,000
Average other liabilities 2,250,000
Average shareholders' equity 12,250,000
Sales 49,000,000Interest expense 400,000
Net income 2,450,000
Required -
Compute Weber Corporation's return on assets (ROA) for 20X1 using a combined federal and state income tax rate of 25% where needed.
Compute the profit margin and asset turnover components of ROA for 20X1.
Weber's management believes that various business initiatives will produce an asset turnover rate of 2.25 next year. If the profit margin next year is unchanged from 20X1, what will be the company's ROA?