Bill's Bike Shop has a return on assets of 12%.Anton's assets = $100 while Anton's owner's equity = $40 and its debt equals $60.What is Bill's return on equity?
A) 18%
B) 20%
C) 30%
D) 12%

Question

Quizplus · Accepted Answer

Bill's return on equity (ROE) can be calculated using the formula ROE = Return on Assets (ROA) / (1 - Debt/Assets). Given ROA = 12%, Debt = $60, and Assets = $100, the calculation is 12% / (1 - 60/100) = 30%.

Bill's Bike Shop Has a Return on Assets of 12