Puffy's Pastries generates five cents of net income for every $1 in equity.Thus,Puffy's has ________ of 5 percent.
A)a return on assets
B)a profit margin
C)a return on equity
D)an EV multiple
E)a price-earnings ratio

Question

Quizplus · Accepted Answer

The given information indicates the return on equity (ROE) of Puffy's Pastries, which is calculated by dividing net income by equity. Therefore, the answer is C. Return on assets (ROA) is calculated by dividing net income by total assets, and there is no information about total assets to calculate this ratio. Profit margin is calculated by dividing net income by total revenue, which is not given in the question. EV multiple and price-earnings ratio are not relevant to the given information.

Puffy's Pastries Generates Five Cents of Net Income for Every