Question

FINANCIAL STATEMENT ITEM 2016 2017 2018 Equity 75,895 96,705 110,878 Net income 15,999 20,545 23,475 Assets...

FINANCIAL STATEMENT ITEM
2016
2017
2018
Equity
75,895
96,705
110,878
Net income
15,999
20,545
23,475
Assets
87,905
90,157
94,347
QUESTION 1:
a. Compute the return on equity ratio for each year.
b. Compute the return on assets for each year.
c. Compute the equity multiplier for each year.
d. Compute the average for each ratio.
e. Discuss and interpret each ratio
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Answer #1

Solution.>

I have solved this question in Excel. The formula used are written along with the values. If you still have any doubt, kindly ask in the comment section.

The formula used are:

Return on Equity = Net Income/Equity

Return on Assets = Net Income/Assets

Equity Multiplier = Asets/Equity

Note: Give it a thumbs up if it helps! Thanks in advance!

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