Answer:
The ROE was 23.33%
Explanation:
To calculate the ROE, first we have to calculate the next:
1) Total asset turnover=Sales/Total assets
=(325000/250,000)=1.3
2) Debt to total asset=Debt/Total assets
Hence debt=0.675*$250,000=$168,750
3) Total assets=Total liabilities+Total equity
Total equity=($250,000-$168,750)=$81,250
4) Equity multiplier=Total assets/Equity
=$250,000/$81,250=3.07(Approx)
5) Profit margin=Net income/Sales
=(19000/325000)=5.84615385%(Approx)
Finally we have to calculate the ROE
ROE=Profit margin*Total asset turnover*Equity multiplier
=5.84615385*3.07*1.3
= 23.33% Approx
