Return on asset is 18.46 percent
Explanation:
Given information's are
Return on equity of Google inc., = 12.00% ( google inc does not change it's capital structure so return remains at 12%)
debt-to-equity ratio = 30.00 percent
Percentage return on assets of Google, Inc
Return on asset = Net income ÷ average total assets
debt-to-equity ratio = Total liabilities ÷ stake holder's equity
here no amount is given for any account let us make an assumption as follows.,debt-to-equity ratio = 30.00 percent
The stack holder's equity is $100 ( 30 ÷ 100 = 0.30 or 30 percent)
![The stack holder's equity is $100 ( 30 ÷ 100 = 0.30 or 30 percent)](https://tex.z-dn.net/?f=The%20stack%20holder%27s%20equity%20%20is%20%24100%20%28%2030%20%C3%B7%20100%20%3D%200.30%20or%2030%20percent%29)
Total Assets considers both Equity and Debt
so the Average assets = (debt + equity)÷ 2
Average assets = ($30 + $100 ) ÷ 2 = $65
![Average assets = ($30 + $100 ) ÷ 2 = $65](https://tex.z-dn.net/?f=Average%20assets%20%3D%20%28%2430%20%2B%20%24100%20%29%20%C3%B7%202%20%3D%20%2465)
Net income is the return attributed to the equity holders here.,
$100 be the share holders equity get from debt-equity ratio
Return on equity = 0.12 = Net income ÷ share holders fund
Net income = 12 percent = $100 × 12÷100 = $12
![Net income = 12 percent = $100 × 12÷100 = $12](https://tex.z-dn.net/?f=Net%20income%20%3D%2012%20percent%20%3D%20%24100%20%C3%97%2012%C3%B7100%20%3D%20%2412)
Return on asset = Net income ÷ average total assets
Return on asset = 12÷ 65 = 0.1846 or 18.46 percent
![Return on asset = 12÷ 65 = 0.1846 or 18.46 percent](https://tex.z-dn.net/?f=Return%20on%20asset%20%20%3D%2012%C3%B7%2065%20%3D%200.1846%20or%2018.46%20percent)