23 April, 09:11
A firm has return on assets (roa) of 15 percent, and debt-equity ratio of 60 percent. calculate the firm's return on equity (roe).
23 April, 11:03
Given that a firm has return on assets (roa) of 15 percent, and debt-equity ratio of 60 percent.
Then, equity multiplier = 1 + Debt-equity ratio = 1 + 60/100 = 1 + 0.6 = 1.6
Return on equity (roe) is given by return on asset multiplied by the equity multiplier.
Therefore, the firm's return on equity is 1.6 x 0.15 = 0.24 = 24%.
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» A firm has return on assets (roa) of 15 percent, and debt-equity ratio of 60 percent. calculate the firm's return on equity (roe).