To find the values for the operating profit margin, net profit margin, return on total assets, and return on common equity, you will need to use the following formulas and input the appropriate values:
(1) Operating profit margin:
Operating Profit Margin = EBIT / Total Sales
In this case, the total sales are given as $25,000,000 and the EBIT (Earnings Before Interest and Taxes) is given as $6,250,000. To find the operating profit margin, divide the EBIT by the total sales:
Operating Profit Margin = $6,250,000 / $25,000,000
(2) Net profit margin:
Net Profit Margin = Earnings available for common stockholders / Total Sales
The earnings available for common stockholders are given as $3,690,000 and the total sales are given as $25,000,000. To find the net profit margin, divide the earnings available for common stockholders by the total sales:
Net Profit Margin = $3,690,000 / $25,000,000
(3) Return on total assets:
Return on Total Assets = Earnings before Interest and Taxes (EBIT) / Total Assets
The EBIT is given as $6,250,000 and the total assets are given as $10,000,000. To find the return on total assets, divide the EBIT by the total assets:
Return on Total Assets = $6,250,000 / $10,000,000
(4) Return on common equity:
Return on Common Equity = Earnings available for common stockholders / Total Equity
The earnings available for common stockholders are given as $3,690,000 and the total equity is given as $9,000,000. To find the return on common equity, divide the earnings available for common stockholders by the total equity:
Return on Common Equity = $3,690,000 / $9,000,000
Substituting the given values into the formulas above will allow you to calculate the respective values for the operating profit margin, net profit margin, return on total assets, and return on common equity.