A firm has a debt-total asset ratio of 74 percent and a return on total assets of 13 percent.What is the return on equity?
A)26 percent
B)50 percent
C)65 percent
D)84 percent
E)135 percent

Question

Quizplus · Accepted Answer

(Total assets - Total equity)/Total assets = .74; Total equity = .26 Total assetsNet income = .13 Total assetsReturn on equity = .13 Total assets/.26 Total assets = 50 percent

A Firm Has a Debt-Total Asset Ratio of 74 Percent