a restaurant achieved 150,000 in net income. The restaurant's balance sheet shows assets of 600, and...
a restaurant achieved 150,000 in net income. The restaurant's balance sheet shows assets of 600, and liabilities of 200,000 what is this restaurants return on equity ratio?
Homework Answers
CALCULATION OF RETURN ON EQUITY RATIO
RETURN ON EQUITY = NET INCOME / SHAREHOLDERs EQUITY
Shareholder's equity = total assets - total liabilities
[ assumption : in above given question total assets is given as 600, so that it could be taken as 6,00,000 instead of 600 ]
therefore shareholders equity = 6,00,000 - 200,000
= 4,00,000
net income = 1,50,000
RETURN ON EQUITY = [ 1,50,000 / 4,00,000 ] * 100
= 37.5 %
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