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7 December, 18:45

A firm has a tax burden of 0.9, a leverage ratio of 1.1, an interest burden of 0.6, and a return-on-sales ratio of 13%. The firm generates $2.62 in sales per dollar of assets.

What is the firm's ROE?

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  1. 7 December, 18:55
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    the firm's ROE is 20%

    Explanation:

    The tax burden is 0.9

    The interest burden is 0.6

    The return on sales margin is 13%

    The turnover ratio is 2.62

    The leverage ratio is 1.1

    Calculate the ROE

    ROE = 0.9 * 0.6 * 0.13 * 2.62 * 1.1

    =0.2 or 20%
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