According to the balance sheet of Free Inc, at the end of the 2020 fiscal year, the cash balance is $200,000, account available balance is $500,000, inventory balance is $750,000; the net fixed asset is $1,500,000. On the other side, the account payable is $250,000, the accrual $40,000, the notes payable is $300,000, long-term debt is $510,000, common stock is $1,200,000, retained earnings is $650,000. The net income is $900,000; the interest payment is $45,600; the tax rate is 25%. Find ROE. a. 49% b. 31% c. 34% d. 75%
According to the
$200,000, account available balance is $500,000, inventory balance is $750,000; the net fixed
asset is $1,500,000. On the other side, the account payable is $250,000, the accrual $40,000, the
notes payable is $300,000, long-term debt is $510,000, common stock is $1,200,000,
earnings
is 25%. Find ROE.
a. 49%
b. 31%
c. 34%
d. 75%
The return on equity is used to evaluate the financial performance of the entity. Then it is a comparison of the net income and stockholders’ equity. The greater the ratio the more beneficial it is for the shareholders because the profit to shareholders is more. The return on equity is the profitability ratio that investor uses while making investment decisions.
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