You are examining the profitability of five different financial institutions as measured by their ROE (return on equity capital) and ROA (return on assets). The table below reports the ROE and ROA for each of these five institutions. Using the data below can you determine what proportion of each institution's total assets are financed by equity (owners') capital and what proportion are financed by debt?
Recall: ROE = Net after-tax income/Total equity capital and ROA = Net after-tax income/Total assets

Question

You are examining the profitability of five different financial institutions as measured by their ROE (return on equity capital) and ROA (return on assets). The table below reports the ROE and ROA for each of these five institutions. Using the data below can you determine what proportion of each institution's total assets are financed by equity (owners') capital and what proportion are financed by debt?
  Recall: ROE = Net after-tax income/Total equity capital and ROA = Net after-tax income/Total assets

Quizplus · Accepted Answer

The Answer of You are examining the profitability of five different financial institutions as measured by their ROE (return on equity capital) and ROA (return on assets). The table below reports the ROE and ROA for each of these five institutions. Using the data below can you determine what proportion of each institution's total assets are financed by equity (owners') capital and what proportion are financed by debt?
  Recall: ROE = Net after-tax income/Total equity capital and ROA = Net after-tax income/Total assets

You Are Examining the Profitability of Five Different Financial Institutions