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Selzer inc. sells all of its merchandise on credit. it has a profit margin of 4 percent, days sales outstanding equal to 60 days, receivables of $150,000, total assets of $3 million, and a debt ratio of 0.64. the firm's return on equity (roe) is:

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abiolataiwo2015

If Selzer inc. sells all of its merchandise on credit. The firm's return on equity (roe) is: 3.3%.

Return  on equity

First step

0.64= TD / $3,000,000

TD = $1,920,000

Second step

DSO ratio = accounts receivable / (annual sales / 365 days)

60 = $150,000 /(sales/365)

Sales = $912,500

Third step

Total Equity

TE= $3,000,000 - $1,920,000

TE = $1,080,000

Fourth step

Net Income

Profit Margin = NI/Sales

0.04 = NI / $912,500

NI = $36,500

ROE= $36,500 / $1,080,000

ROE= 3.3%

Therefore The firm's return on equity (roe) is: 3.3%.

Learn more about return on equity here:https://brainly.com/question/27821130

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