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    Return on equity in a firm

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    FIRM A AND FIRM B HAVE DEBT-TOTAL ASSET RATIOS OF 60 PERCENT AND 40 PERCENT AND RETURNS ON TOTAL ASSETS OF 20 PERCENT AND 30 PERCENT, RESPECTIVELY. WHICH FIRM HAS GREATER RETURN ON EQUITY?

    © BrainMass Inc. brainmass.com October 10, 2019, 12:01 am ad1c9bdddf
    https://brainmass.com/business/flow-to-equity/return-on-equity-firm-276011

    Solution Preview

    ROE = ROA X Assets/Equity
    We are given the Debt/Assets ratio
    Now Equity/Assets = ...

    Solution Summary

    The solution explains how to calculate the return on equity

    $2.19