Question

describe briefly what the current capital structure of games stop is?

Answer 1

ROE = (annual net profit ÷ sales) × (sales ÷ assets) × (assets ÷ shareholders’ equity).

Retunr on Equity shows how much of assets are funded by equity and can show how sustainable GME’s capital structure is.

The first component is profit margin, which measures how much of sales is retained after the company pays for all its expenses. The other component, asset turnover, illustrates how much revenue GME can make from its asset base. Finally, financial leverage measures amount of a firm's assets that are financed by its shareholders by comparing total assets with total shareholder's equity.

GME’s long term debt-to-equity ratio currently stands at a sensible 36.9%, meaning GME has not taken on excessive debt to drive its returns.