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1 year ago

A firm has ROA (Return on Assets) of 16% and has the debt ratio of 30%. What's the firm's ROE (Return on Equity)?

Business

1 answer:

timurjin [86]1 year ago

5 0

The firm's ROE is 4.8%.

The return on asset is an example of a profitability ratio. Profitability ratios measure the ability of a firm to generate profits from its asset

Return on equity = net income / average total equity

Return on assets is the ratio of net income and average total asset.

Return on assets = net income / average total asset

The debt ratio is the ratio of average total asset and average total equity.

Return on equity = return on asset x debt ratio

16% x 30% = 4.8%

To learn more about financial ratios, please check: brainly.com/question/26092288

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