Answered: Use the information provided below to…

Name: Use the information provided below to answer the question. The ratios
Uploaded: 2022-11-29T14:11:17.000Z
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Description: Use the information provided below to answer the question. The ratios are for last year, for ABC Inc and the average of its industry as follows ABC Inc Industry Average Inventor

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter3: Evaluation Of Financial Performance

Section: Chapter Questions

Problem 13P

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Inventory $150,000 $100,000

Accounts Receivable 24,000 24,000

Other Assets 76,000 76,000

Total Assets $250,000 $200,000

Profit Margin 1.8% 2%

Equity $ 125,000 $ 125,000

Sales $ 1,100,000 $ 1,000,000

What is ABC’s Return on Equity (ROE)?

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Step 1

$R e t u r n o n E q u i t y = \frac{N e t i n c o m e}{S h a r e h o l d e r s e q u i t y}$

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