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Question 22 pts Assume that the following financial ratios were computed from the 2017 financial statements...

Question 22 pts

Assume that the following financial ratios were computed from the 2017 financial statements of Florida Industries:

Return on sales

(profit margin)

0.30

Return on assets

0.16

Common equity leverage

0.87

Capital structure leverage

2.22

Asset turnover

1.69

What was the return on equity for Florida in 2017?

Group of answer choices

4%

31%

51%

11%

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Answer #1

B. 31%

Return on equity = Return on assets × Common Equity Leverage × Capital Structure Leverage

Return on equity = 0.16 × 0.87 × 2.22

Return on equity = 0.31 or 31%

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