Assume that Dell Corp has total liabilities of $18,000, and total assets of $26,000. It has...

Assume that Dell Corp has total liabilities of $18,000, and total assets of $26,000. It has sales of $10,000. If the profit margin is 11%, what is ROE (return on equity)?

A) 13.75%

B) 9.17%

C) 1.25%

D) There is not enough information, they cannot be calculated.

E) There is enough information, but a, b, and c, are not correct.

Solutions

Expert Solution

Profit margin=Net income/Sales

Net income=10,000*11%

=$1100

Total assets=Total liabilities+Total equity

Total equity=(26000-18000)=$8000

ROE=net income/Total equity

=1100/8000

=13.75%

jeff jeffy answered 2 years ago

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