General Electric Income Statement for the Year Ended December 31, Year 17

• Sales revenue: $5,000,000
• Cost of goods sold: $3,400,000
• Gross margin: $1,600,000
• Operating expenses:
  • Selling expenses: $500,000
  • Depreciation expenses: $350,000
• Operating income: $750,000
• Nonoperating items: $200,000
• Net income: $550,000

Balance Sheet as of December 31, Year 17

• Assets:
  • Cash: $400,000
  • Accounts receivable: $900,000
  • Merchandise inventory: $800,000
  • Equipment (less accumulated depreciation): $1,100,000
  • Nonoperating assets: $800,000
• Total assets: $4,000,000
• Liabilities:
  • Accounts payable: $400,000
  • Notes payable: $350,000
  • Stockholders' equity: $3,250,000
• Total liabilities and stockholders' equity: $4,000,000

Required:

a. Calculate the gross margin percentage. b. Calculate the operating margin percentage. c. Calculate the return on assets (ROA). d. Calculate the return on equity (ROE). e. General Electric is considering selling an underperforming division for $700,000, which will decrease net income by $100,000. Calculate the new ROA and ROE.