question 7 what is the ROE of each?

unit? 5. (Profitability ratios) A firm had the following income statement for last year: Sales $ 37,611 Less: Cost of goods sold 20.889 Gross profit 16,722 Less: Operating expenses 11,483 Lese: Depreciation 1.575 Operating profit (EBIT) 3,664 Less: Interest expense 1.400 Earnings before taxes (EBT) 2,264 Less: Tax expense 475 Earnings after taxes (EAT) $ 1.789 Calculate the firm's: a. Gross profit margin ratio b. Operating profit margin ratio c. Pre-tax profit margin ratio d. Net profit margin ratio 6. (Profitability ratios) A financial analyst calculated the following ratios from a firm's income statement: Gross profit margin = 60% Operating profit margin = 27% Pre-tax profit margin = 14% The firm had sales of $500,000 and paid federal in- come taxes at a 21% rate. a. Reproduce the firm's income statement. b. Calculate the firm's net profit margin ratio. 7. (Rates of return) The firm of Problem 5 finances itself with equal amounts of liabilities and owners' equity. Calculate the firm's basic earning power, return on assets, and return on equity if its average total assets last year were equal to: a. $ 5,000 c. $25,000 b. $15,000 d. $35,000