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27 May, 23:03

Reliable Cars has sales of $807,200, total assets of $1,105,100, and a profit margin of 9.68 percent. The firm has a total debt ratio of 64 percent. What is the return on equity?

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  1. 28 May, 00:21
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    19.64%

    Explanation:

    The return on equity shall be determined through following mentioned formula:

    Return on equity=Net profit/Equity

    In the given question

    Net profit=9.68%*$807,200=$78,136.96

    Equity=Assets-Total Debt

    =$1,105,100-64% ($1,105,100)

    =$397,836

    Return on Equity=$78,136.96/$397,836

    =19.64%
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