Question

In 2018, FedEx had total assets of $52.9 billion, an asset turnover ratio of 1.65 times, and a net profit margin of 13.5%. a. What is FedEx's return on assets? b. Find FedEx's ROE, given that 42.9% of the assets are financed with stockholders' equity. a. FedEx's return on assets (ROA) is %. (Round to two decimal places.) b. Given that 42.9% of the assets are financed with stockholders' equity, FedEx's return on equity (ROE) is %. (Round to two decimal places.)

Answer 1

Asset turnover=Sales/Total assets

Sales=(52.9*1.65)=$87.285 billion

Net profit margin=Net income/Sales

Net income=(87.285*13.5%)=11.783475 billion

a.ROA=Net income/Total assets

=11.783475/52.9

=22.28%(Approx).

b.Total equity=(52.9*42.9%)=$22.6941 billion

ROE=Net income/Equity

=11.783475/22.6941

=51.92%(Approx).