Martn Tucker Enterprises., has total equity of $645,500, sales of $1.15 million, and a profit margin of 3.6 percent. What is the return on equity?

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Business

Misael Boyle

1 November, 08:07

Martn Tucker Enterprises., has total equity of $645,500, sales of $1.15 million, and a profit margin of 3.6 percent. What is the return on equity?

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Good · Answer 1

The return on equity (ROE) is 6.41%

Explanation:

The return on equity (ROE) is a profitability ratio that shows how much profit each dollar of equity generates. ROE is calculated by using following formula:

The return on equity (ROE) = Net income/Equity

Martn Tucker Enterprises., has sales of $1.15 million, and a profit margin of 3.6 percent.

Net income = sales x profit margin = $1,150,000 x 3.6% = $41,400

The return on equity (ROE) = ($41,400/$645,500) x 100% = 6.41%