Will need this by April 12 @ MN...thx

Given a profit margin = 10%, ROE = 20%, D/E = 1.5, and assets = $200,
calculate sales.
a.	$10
b.	$160
c.	$250
d.	$640
e.	$1,000

Hi!!


Assets = Liabilities + Equity = $200 ==> Liabilities = $200 - Equity

D/E = Debt/Equity Ratio = Liabilities / Equity = 1.5 ==>

==> 1.5 = ($200 - Equity)/Equity ==> 1.5*Equity = $200 - Equity ==>

==> Equity = $200/2.5 = $80


ROE = Net income / Equity = 0.20 ==>

==> Net income / $80 = 0.20 ==> Net Income = $80*0.20 = $16


Profit margin = Net income / Sales = 0.10 ==>

==> Sales = Net income /Profit margin = 
          = $16/0.10 =
          = $160

The correct answer is b).


I hope that this helps you. Feel free to request for a clarification
if you need it.

Regards.
livioflores-ga