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Starbucks has total assets of $600,000 and has the following ratios: Sales/Total assets: 2.0 Return on...

Starbucks has total assets of $600,000 and has the following ratios:

Sales/Total assets: 2.0

Return on assets (ROA): 6%

Return on equity (ROE): 7%

What is Starbucks' total stockholders equity?

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Answer #1

Total assets = $600,000
Sales/Total assets = 2
=> sales = total assets *2 = 1200000

Now , Return on assets= net income/average total assets = 6%
=> net income = 6%*600000= $36000
Return on equity = Net income/ shareholder equity = 7%
=> share holder equity = net income/7%
=>36000/7% = $512485.71
therefore, total shareholder equity = $512485.71

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