May Company's return on equity was 21% and the financial leverage ratio was 13% (positive). What was the return on assets?
A) 34%
B) 21%
C) 13%
D) 8%

Name: May Company's return on equity was 21% and the financial leverage ratio was 13% (positive). What was the return on assets? A) 34% B) 21% C) 13% D) 8%
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Question

Quizplus · Accepted Answer

Return on Assets (ROA) can be calculated by dividing Return on Equity (ROE) by the financial leverage ratio. Here, ROA = 21% / 13% = 1.615, which is approximately 8%.

May Company's Return on Equity Was 21% and the Financial