Ask Question
11 August, 07:15

Galaxy Inc. has a tax burden ratio of. 75, an interest burden of. 6, a leverage ratio of 1.25, and a return on sales of 10%. This year the firm makes $2.40 in sales per dollar of assets. What is the firm's ROE?

a. 15%

b. 11.5%

c. 13.5%

d. 20%

+2
Answers (1)
  1. 11 August, 09:25
    0
    Return on equity = 13.5 %

    Explanation:

    given data

    tax burden ratio = 0.75

    interest burden = 0.6

    leverage ratio = 1.25

    return on sales = 10%

    sales assets = $2.40

    to find out

    What is the firm's ROE

    solution

    we get here Return on equity (ROE) that is express as

    Return on equity = tax burden ratio * leverage ratio * interest burden ratio * return on sale * sales ... 1

    put here value we get

    Return on equity = 0.75 * 1.25 * 0.6 * 10% * 2.40

    Return on equity = 0.75 * 1.25 * 0.6 * 0.10 * 2.40

    Return on equity = 0.135

    Return on equity = 13.5 %
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “Galaxy Inc. has a tax burden ratio of. 75, an interest burden of. 6, a leverage ratio of 1.25, and a return on sales of 10%. This year the ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers