FDS’s total assets are $100,000, return on assets is 3%, and return on equity is 5%. Calculate the net income and portion of total assets finance with debt. Return on assets is used to measure how much the firm profitable with related to firm’s total assets. Return on assets = Net income Total assets Return on equity is used to measure the financial performance that the owners of common stock of a company receive on their shareholdings. Return on equity = Net income Equity

Question

Want to see the full answer?

Answer 1

Question

Chapter 2, Problem 18PROB

Summary Introduction

FDS’s total assets are $100,000, return on assets is 3%, and return on equity is 5%. Calculate the net income and portion of total assets finance with debt.

Return on assets is used to measure how much the firm profitable with related to firm’s total assets.

Return on assets=Net incomeTotal assets

Return on equity is used to measure the financial performance that the owners of common stock of a company receive on their shareholdings.

Return on equity=Net incomeEquity

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

Nakamura, Incorporated, has a total debt ratio of .57, total debt of $317,000, and net income of $38,750. What is the company’s return on equity? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.

Martinez, Inc., has a total debt ratio of .65, total debt of $345,000, and net income of $31,280 Required: What is the company's return on equity? (Do not round intermediate calculations Round your answer to 2 decimal places (e.g., 32.16).) Return on equity

The Rossdale Company has a ratio of long-term debt to long-term debt plus equity of .34 and a current ratio of 1.29. Current liabilities are $1,450, sales are $7,380, profit margin is 8.1 percent, and ROE is 14.3 percent. What is the amount of the firm’s net fixed assets? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)