What will be Gamma Inc.'s return on equity if total asset turnover is 0.85,operating profit margin is 0.15,two-thirds of its assets are financed through equity,and debt burden is 0.6?
A) 9.56%
B) 11.48%
C) 16.96%
D) 38.25%

Question

Quizplus · Accepted Answer

Leverage ratio = 1 / 0.67ROE = leverage ratio × asset turnover × operating profit margin × debt burdenROE = 1.5 × 0.85 × 0.15 × 0.6ROE = 0.1148, or 11.48%

What Will Be Gamma Inc