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Thomas Lane Company: calculate return on equity and return on equity ratio

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The Thomas Lane Company has a return-on-assets (investment) ratio of 12 percent.

a. If the debt-to-total-assets ratio is 40 percent, what is the return on equity?

b. If the firm had no debt, what would the return-on-equity ratio be?

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The expert calculate the return on equity and return on equity ratios.

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The Thomas Lane Company has a return-on-assets (investment) ratio of 12 percent.

* ROA: (Net Income) / (Total Assets) = 0.12

a. If the debt-to-total-assets ratio is 40 percent, what is the return on equity?

(Total Debts) / (Total Assets) = 0.4

*Assets = Liabilities + Shareholder ...

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Umut Oltulu, MBA
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  • BSc, Dokuz Eylul University
  • MBA, Texas A&M University-Kingsville
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