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Debt ratio=Debt/total assets
Hence debt=0.55total assets
Hence total assets=(2.5/0.55)=$4.545million
total assets=debt+equity
Hence equity=(1-0.55)=0.45total assets
=(0.45*$4.545million)=$2.045 million(Approx)
ROE=Net income/total equity
= ($250,000/2,045,454.545)
=12.22%(Approx).
Solution
Debt ratio=Debt/total assets
Hence debt=0.55total assets
Hence total assets=(2.5/0.55)=$4.545million
total assets=debt+equity
Hence equity=(1-0.55)=0.45total assets
=(0.45*$4.545million)=$2.045 million(Approx)
ROE=Net income/total equity
= ($250,000/2,045,454.545)
=12.22%(Approx).

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Debt ratio=Debttotal assetsHence debt=0.55total assetsHence tot.pdf

  • 1. Debt ratio=Debt/total assets Hence debt=0.55total assets Hence total assets=(2.5/0.55)=$4.545million total assets=debt+equity Hence equity=(1-0.55)=0.45total assets =(0.45*$4.545million)=$2.045 million(Approx) ROE=Net income/total equity = ($250,000/2,045,454.545) =12.22%(Approx). Solution Debt ratio=Debt/total assets Hence debt=0.55total assets Hence total assets=(2.5/0.55)=$4.545million total assets=debt+equity Hence equity=(1-0.55)=0.45total assets =(0.45*$4.545million)=$2.045 million(Approx) ROE=Net income/total equity = ($250,000/2,045,454.545) =12.22%(Approx).