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Calculate the firm operating return on assets

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Question - Analyzing Profitability - In 2016, the Allen Corporation had sales of $62 million, total assets of $48 million, and total liabilities of $21 million. The interest rate on the company's debt is 6.2 percent, and its tax rate is 35 percent. The operating profit margin is 10 percent.

a. Compute the firm's 2016 net operating income and net income.

b. Calculate the firm's operating return on assets and return on equity. (Hint: You can assume that interest must be paid on all of the firm's liabilities.)

Reference no: EM133129878

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