Nadine Enterprises has total assets of $240,000, a debt- equity ratio of 0.60, and a return on assets of 9%. What is the return on equity?

Question

Quizplus · Accepted Answer

To find the return on equity (ROE), we first need to determine the equity. Given the debt-equity ratio of 0.60, we have debt = 0.60 * equity. The total assets are $240,000, which equals debt + equity. Solving these equations, equity = $150,000. The return on assets (ROA) is 9%, so net income = 9% of $240,000 = $21,600. ROE = net income / equity = $21,600 / $150,000 = 14.4%.

Nadine Enterprises Has Total Assets of $240,000, a Debt- Equity