A firm’s Total Assets equals $10,000,000, and Total Equity equals $3,000,000. If its Return on Assets...

A firm’s Total Assets equals $10,000,000, and Total Equity equals $3,000,000. If its Return on Assets equals 10%, then what is its Earnings After Taxes?

	a.	$700,000
	b.	need to know what its Revenues are
	c.	$300,000
	d.	$1,000,000

Expert Solution

Return on assets = Earning after taxes/Total assets
Substituting available values, we have:
0.10 = Earnings after taxes/10000000
So, Earnings after taxes = 10000000*0.10 =	$ 1,000,000
Answer: [d] $1,000,000

jeff jeffy answered 2 years ago

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