Question

A certain company has net income of $114.9 million, sales of $698.4 million, total assets of $730.2 million, a debt-to-equity ratio of 0.48, and current assets of $101 million. What is their return on equity (ROE)

Answer 1

Answer:

30.26%

Explanation:

Return on equity measures how profitable a business is, when compared to it's equity.

Return on equity is computed as;

= Net income / Shareholder's equity

Where,

Shareholder's equity = Company's assets - Debts

= $114,900,000 / ($730,200,000 - $350,496,000)

= $114,900,000 / $379,704,000

= 30.26%