Question

the peach pit, a restaurant, has net income of $25,000, sales of $55,000, assets of $115,000, and no debt. what is their roe?

Answer 1

1) 21.7%

2)4.29%

3) 2.17%

4) 42.9%

Answer 2

Answer:

21.7%

Explanation:

ROE = (Net Income / Sales) X (Sales / Assets) X (Assets / Equity)

If a company has no debt, then their equity multiplier is 1.

(25,000/55,000) (55,000/115,000) 1 = 21.7%