Return on equity is the economic ratio that is calculated to determine the ability of a company to develop profit for the equity shareholders. The formula is:
ROE = Net income/Equity × 100
<h3>Return on equity</h3>
Net income = Sales xProfit margin
Net income = $807,200 x6.68%
Net income = $807,200 x0.0668
Net income = $53,920.96
Debt = Debt ratio x Total assets
Debt = 54% * $768,100
Debt = 0.54 * $768,100
Debt = $414,774
Equity = Total assets - Debt
Equity = $768,100 - $414,774
Equity = $353,326
ROE = Net income/Equity × 100
ROE = $53,920.96/$353,326 × 100
ROE = 15.26%
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