A firm has an ROE of 6%, a debt-equity ratio of 0.7, a tax rate of 35%, and pays an interest rate of 6% on its debt. What is its operating ROA?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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ROA?

A firm has an ROE of 6%,
a debt-equity ratio of
0.7, a tax rate of 35%,
and pays an interest rate
of 6% on its debt.
What is its operating
ROA?
Transcribed Image Text:A firm has an ROE of 6%, a debt-equity ratio of 0.7, a tax rate of 35%, and pays an interest rate of 6% on its debt. What is its operating ROA?
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