Question

Taylor's Men's Wear has a debt-equity ratio of 55 %, sales of $587,000, net income of $63,400, and total debt of $196,000. What is the return on equity

Answer 1

Answer:

Return on equity is 17.94%

Explanation:

Debt to equity ratio = Debt / Equity

55% = $196,000 / Equity

Equity = $196,000 / 55%

Equity = $356,363.64

Return on equity = Net income / Equity

Return on equity = $63,400 / $356,363.64

Return on equity = 17.94%