Raleigh Manufacturing Reported Net Income (Amounts in Millions)of $1,166 on Sales

Raleigh Manufacturing reported net income (amounts in millions)of $1,166 on sales of $5,520 during Year 4.Interest expense totaled $75.The income tax rate was 30 percent.Average total assets were $7,135,and average common shareholders' equity was $3,405.The firm did not have preferred stock outstanding or minority interest in its equity.
REQUIRED:
a.Compute the rate of ROA.Disaggregate ROA into profit margin for ROA and assets
turnover components.
b.Compute the rate of ROCE.Disaggregate ROCE into profit margin for ROCE,assets
turnover,and capital structure leverage ratio components.
c.Calculate the amount of net income to common shareholders derived from the
excess return on creditors' capital and the amount from the return on common
shareholders' capital.

Correct Answer:

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a.Rate of Return on Assets: [$1,166 + (1...

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