A firm with sales of $1,000,000, net profits after taxes of $30,000, total assets of $1,500,000,...

A firm with sales of $1,000,000, net profits after taxes of $30,000, total assets of $1,500,000, and total liabilities of $750,000 has a return on equity of
Seleccione una:
A. 3 percent.
B. 15 percent.
C. 4 percent.
D. 20 percent.

Expert Solution

Answer:
Total Assets = Total Liabilities + Total Equity
$1,500,000 = $750,000 + Total Equity
Total Equity = $750,000

Return on Equity = Net Profits after taxes/ Total Equity * 100
Return on Equity = $30,000 / $750,000 * 100
Return on Equity = 4%

Option C is correct.

jeff jeffy answered 2 years ago

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