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Memphic Memphic
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6 years ago
If ECE's return on assets (ROA) is 12%, then ECE's return on equity (ROE) is:
A) 10%
B) 12%
C) 18%
D) 22%
Textbook 
Corporate Finance: The Core

Corporate Finance: The Core


Edition: 4th
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#1
6 years ago
D
Explanation:  D) ROA = (Net Income + Interest Expense)/Assets = ($X million + 2 million)/$200 million = 0.12; X = $22 million;
ROE = (Net Income)/(Shareholder Equity) = $22 million/$100 million = 0.22 = 24%
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