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What is Meryl Corporation's return on total assets (ROA)?

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The Meryl Corporation's common stock is currently selling at $100 per share, which represents a P/E ratio of 10. If the firm has 100 shares of common stock outstanding, a return on equity of 20 percent, and a debt ratio of 60 percent, what is its return on total assets (ROA)?

8.0%
10.0%
12.0%
16.7%
20.0%

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Solution Summary

This solution provides step-by-step calculations for ROE and then ROA.

Solution Preview

a)
P/E = 10 = $100/EPS
EPS = $100/10 = $10.
Earnings = NI = $10(100 ...

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