Question

In response to complaints about high prices, a grocery chain runs the following advertising campaign: "If you pay your child $6 to go buy $50 worth of groceries, then your child makes twice as much on the trip as we do." You’ve collected the following information from the grocery chain’s financial statements: (millions) Sales $ 586 Net income 32 Total assets 485 Total debt 393 What is the ROE for the store? (In %)

Answer 1

ROE : Net Income / Equity : $32 / $92 = 34,8%

Step-by-step explanation:

To calculate the ROE its necessary to know the Equity of the company which is the difference between the Total Assets and the Total Debt.

Total Assets : $485

Total Debt : $393

Equity : $92

Net Income : $32

ROE : Net Income / Equity : $32 / $92 = 34,8%

The ROE it's a measure that let me know the financial performance of the company, its a good indicator of how efficiently the company it's handling the investor's money.