Company A has a capital structure of $80M debt and $20M equity. This year, the company reported a net income of $17M. What is Company A's return on equity?*117.6%21.3%85.0%28.3%
Question
Company A has a capital structure of 20M equity. This year, the company reported a net income of $17M. What is Company A's return on equity?*117.6%21.3%85.0%28.3%
Solution
To calculate the Return on Equity (ROE), you need to divide the net income by the total equity and then multiply by 100 to get the percentage.
Here's the step-by-step calculation:
- Identify the net income, which is $17M.
- Identify the total equity, which is $20M.
- Divide the net income by the total equity: 20M = 0.85
- Multiply by 100 to get the percentage: 0.85 * 100 = 85%
So, the Return on Equity (ROE) for Company A is 85.0%.
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