Use the following information for ECE incorporated:
Assets $200 million
Shareholder Equity $100 million
Sales $300 million
-If ECE's return on assets (ROA)is 12% ,then ECE's return on equity (ROE)is:
A) 10%
B) 12%
C) 18%
D) 24%

Question

Quizplus · Accepted Answer

D) ROA = (Net Income)/Assets = $X million/$200 million = 0.12; X = $24 million;
ROE = (Net Income)/(Shareholder Equity) = $24 million/$100 million = 0.24 = 24%

Use the Following Information for ECE Incorporated