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F. Naz
F. Naz, B.Com
Category: Single Problem
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Experience:  Have completed B.Com and CA Finalist
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Find ROE if NI=60000and Tl assets =400000 and Debt-equity

Customer Question

Find ROE if NI=60000and Tl assets =400000 and Debt-equity ratio is 1.5 and tl acc rec is 60000 and collection period is 23 days
Submitted: 11 months ago.
Category: Single Problem
Expert:  JTtax replied 11 months ago.

Hi, my name is ***** ***** I can help. Just quick question since people use different abbreviations, what do you mean by "TI?"

Customer: replied 11 months ago.
sorry its TL= total
Expert:  JTtax replied 11 months ago.

okay, here is how to solve: assets = liabilities + equity, solve for equity,

400,000 = 1.5D

D = 266,666.67

E = 133,333.33

60,000/133,333,33 = 45% ROE

Customer: replied 11 months ago.
wait, what do you mean by D and if you solving for equity wouldnt it be (assets-liability=equity) and not multipliying???
Expert:  Manal Elkhoshkhany replied 11 months ago.


I disagree with the other expert, you are right about the equation.

Total Assets = Debt (Liabilities) + Equity

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Expert:  F. Naz replied 11 months ago.


Expert:  F. Naz replied 11 months ago.

Sorry sent it wrongly, take care.

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