Ask Question
4 May, 12:30

During the latest year, Sky Inc. had total sales of $500,000, net income of 30,000, and its year-end total assets were $250,000. The firm's total debt to total assets ratio was 0.36. You can assume total debt is the same as total liabilities. What is firm's return on equity (ROE) ?

+2
Answers (1)
  1. 4 May, 15:04
    0
    18.75%

    Explanation:

    Data provided in the question:

    Total sales = $500,000

    Net income = $30,000

    Total assets = $250,000

    Debt to total assets ratio = 0.36

    Thus,

    Total debt = 0.36 * $250,000

    = $90,000

    Shareholders equity = Total assets - Total debt

    = $250,000 - $90,000

    = $160,000

    Now,

    Return on equity = Net income : Shareholders Equity

    = [ $30,000 : $160,000] * 100%

    = 18.75%
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “During the latest year, Sky Inc. had total sales of $500,000, net income of 30,000, and its year-end total assets were $250,000. The firm's ...” 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