Which equation could be used to solve the question below?
2 answers:
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Answer:
The return on assets in this business for Macrosoft is
ROA = 10.50%
Step-by-step explanation:
Return on Equity:
ROE represents how much a firm is generating profits by using the shareholder's money.
ROE is calculated as
Return on Assets:
ROA represents how much a firm is generating profits for every dollar of its assets.
ROA is calculated as
What is the return on assets in this business if Macrosoft has no debt?
Debt plays an important role in the calculations of return on assets.
We know that
Assets = Liabilities + Equity
Since the Macrosoft has no debt, its return on assets will be same as return on equity.
Assets = Equity
ROA = ROE
ROA = 10.50%