Major Electric Corporation (MEC) has a Return on Equity of 20% and Total Debt Ratio =...
Major Electric Corporation (MEC) has a Return on Equity of 20% and Total Debt Ratio = 0.30. If its total debt is $500,000 and its sales = $2,000,000, what is the return on assets?
a. 0.75
b. 0.14
c. 1.50
d. 2.00
Homework Answers
Return on Assets=Return on Equity*Equity/Assets=20%*(1-Debt/Assets)=20%*(1-0.30)=14% or 0.14
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