Question

Determine a business's ROE (return on equity) given the following information: Revenue: $29,261; Net

Income: $4,212; Assets: $27,987; Shareholders' Equity: $13,572; Net Profit Margin: 14.39%; Asset
Turnover: 1.0455; Equity Multiplier: Assets 2.0621

Answer 1

The Return on Equity (ROE) for the business is calculated as Net Income divided by Shareholder's Equity, resulting in an ROE of 31.05%.

Step-by-step explanation:

To calculate a business's Return on Equity (ROE), the formula we use is Net Income divided by Shareholder's Equity. Based on the information provided, the Net Income is $4,212 and the Shareholder's Equity is $13,572. Therefore, the ROE calculation would be:

ROE = Net Income / Shareholder's Equity

ROE = $4,212 / $13,572

ROE = 0.3105 or 31.05%

Thus, the ROE for the business is 31.05%, which signifies that for every dollar of equity, the company was able to generate 31.05 cents of profit.