Question

Carroll, Inc., has a total debt ratio of .52, total debt of $327,000, and net income...

Carroll, Inc., has a total debt ratio of .52, total debt of $327,000, and net income of $41,250.

What is the company’s return on equity? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Return on equity             %

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Answer #2

Calculation of total assets of Carroll Inc.

Debt Ratio = Total Debts / Total Assets

0.52= $3,27,000 / Total Assets

Total Assets = $ 3,27,000/0.52

= $ 6,28,846.15

Calculation of Shareholders Equity

Shareholders Equity = Total assets - Total Liabilities

= $ 6,28,846.15 - $3,27,000

= $ 3,01,846

NOTE : As no other information about liabilities of the company is mentioned it is assumed that Total debt are total liabilities of the company.

Calculation of Return on equity.

Return on equity = Net Income / Shareholders Equity

= $ 41,250 / $ 3,01,846

= 13.67 %

answered by: anonymous
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