Cecilia Company reported net income of $1,200,000. The average total liabilities were $4,300,000 and average total stockholders' equity was $5,200,000. Interest expense was $100,000 and the tax rate was 40%. Cecilia's return on assets ratio is closest to: What is Trenton's price/earnings ratio?
A)13.7%
B)12.6%
C)11.6%
D)13.3%

Question

Quizplus · Accepted Answer

Return on assets (ROA) = Net Income / Average Total Assets
ROA = $1,200,000 / (($4,300,000 + $5,200,000) / 2) = 12.2%

To find Trenton's price/earnings ratio, we would need additional information such as the current stock price and earnings per share. This information is not given in the question, so we cannot determine Trenton's price/earnings ratio.

Cecilia Company Reported Net Income of $1,200,000