Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter12: Fainancial Statement Analysis
Section: Chapter Questions
Problem 15MCQ: Hummel Inc. has $30,000 in current assets and $15,000 in current liabilities. What is Hummels...
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Question
If Turnpoint Inc. has net income of $300,000, assets of $3,000,000, sales of $2,000,000, and debt of 1,300,000, what is their ROE?
Expert Solution
Step 1
Return on Equity is a profitability metric that calculates the net income earned as a % of equity.
In this question, we are given the net income. We need to determine the value of equity by using the balance sheet principle as below:
Total assets = equity + debt
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