Firm A and Firm B have debt-total asset ratios of 32 percent and 22 percent, respectively, and returns on total assets of 9 percent and 15 percent, respectively. What is the return on equity for Firm A and Firm B? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)
Financial Ratios
A Ratio refers to a figure calculated as a reference to the relationship of two or more numbers and can be expressed as a fraction, proportion, percentage, or the number of times. When the number is determined by taking two accounting numbers derived from the financial statements, it is termed as the accounting ratio.
Return on Equity
The Return on Equity (RoE) is a measure of the profitability of a business concerning the funds by its stockholders/shareholders. ROE is a metric used generally to determine how well the company utilizes its funds provided by the equity shareholders.
Problem 3-11 Return on Equity
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Firm A and Firm B have debt-total asset ratios of 32 percent and 22 percent, respectively, and |
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