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)?
P/E = 10 = $100/EPS
EPS = $100/10 = $10.
Earnings = NI = $10(100 ...
This solution provides step-by-step calculations for ROE and then ROA.