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

net income = $290,000
total debt = $2,290,000
Debt ratio = 50% = 0.5
Debt ratio = total debt/total assests
total Assests = 0.5 x 2,290,000 = $1,145,000

Equity = Assets - debts
        = - $1,145,000
return on equity = net income/ total equity
                 = -290,000/1,145,000
                 =- 0.253275
                 = -25.33%

Related Questions

Navigate

• Browse (All)
• Browse Y
• Subjects

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