Question

In 2014, Banjo Beats Ltd. announced ROA of 8.56%, ROE of 14.5% and profit margin of 20.5%. The firm had total assets of Rs. 16.5 crores at the year-end. Calculate net income available to equity shareholders, equity and net sales of Banjo Beats Ltd.

Answer 1

Return on Assets (ROA) = Net Income available to equity shareholders / Total Assets 0.0856 

= Net Income available to equity shareholders / 16.5 crores

Net Income available to equity shareholders = 16.5 crores x 0.0856 = Rs. 1.4124 crores

Return on Equity = Net Income available to equity shareholders / Equity

0.145 = 1.4124 crores / Equity

Equity = Rs. 9.74 crores

Profit Margin = Net Income available to equity shareholders / Sales 

0.205 = 1.4124 crores /Sales

Sales = Rs. 6.89 crores.