If a retailer has an ROA of 10 percent and a financial leverage of 4.0, then...

Question

Question

If a retailer has an ROA of 10 percent and a financial leverage of 4.0, then its RONW would be:

Please explain how to get the correct answer of 40%

Answer 1

Answer #1

Answer is 40.00%

ROA = 10.00%
Financial Leverage = 4.00

RONW = ROA * Financial Leverage
RONW = 10.00% * 4.00
RONW = 40.00%

Answer 2

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