You are thinking of investing in Nikki T\'s, Inc. You have only the following in

Question

You are thinking of investing in Nikki T's, Inc. You have only the following information on the firm at year-end 2015: net income is $290,000, total debt is $2.29m, and debt ratio is 50 percent.

What is Nikki T's ROE for 2015? (Do not round intermediate calculations and round your final answer to 2 decimal places.)

You are thinking of investing in Nikki T's, Inc. You have only the following information on the firm at year-end 2015: net income is $290,000, total debt is $2.29m, and debt ratio is 50 percent.

Explanation / Answer

Since debt Ratio is 50% this means equity ratio is also 50%. This implies that value of equity is equal to value of debt. Thus, value of equity is equal to = $2.29m

ROE = ($290,000/$2,900,000) * 100 = 10%

Related Questions

Navigate

• Browse (All)
• Browse Y
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.