Procter & Gamble Co. Income Statement for the Year Ended June 30, Year 14

• Sales revenue: $3,500,000
• Cost of goods sold: $2,200,000
• Gross margin: $1,300,000
• Operating expenses:
  • Selling expenses: $300,000
  • Depreciation expenses: $200,000
• Operating income: $800,000
• Nonoperating items: $120,000
• Net income: $680,000

Balance Sheet as of June 30, Year 14

• Assets:
  • Cash: $250,000
  • Accounts receivable: $600,000
  • Merchandise inventory: $500,000
  • Equipment (less accumulated depreciation): $800,000
  • Nonoperating assets: $450,000
• Total assets: $2,600,000
• Liabilities:
  • Accounts payable: $250,000
  • Notes payable: $200,000
  • Stockholders' equity: $2,150,000
• Total liabilities and stockholders' equity: $2,600,000

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. If Procter & Gamble Co. decides to issue $200,000 of new stock to fund a new project expected to increase net income by $50,000, calculate the new ROE.