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A company has the following items for the fiscal year 2020: Revenue =10 million Net income = 2 million Total Equity = 20 million Total Assets = 30 million Calculate the company’s ROA and ROE
A company has the following items for the fiscal year 2020:
- Revenue =10 million
- Net income = 2 million
- Total Equity = 20 million
- Total Assets = 30 million
Calculate the company’s ROA and ROE
Expert Solution
A company has the following items for the fiscal year 2020:
Revenue =10 million
Net income = 2 million
Total Equity = 20 million
Total Assets = 30 million
Calculate the company’s ROA and ROE
1. ROA is the Return on Assets
ROA = Net Income / Total Assets
ROE is the Return on Equity
ROE = Net Income / Total Equity
2. Return on Assets = Net Income / Total Assets
ROA = 2 / 30
ROA = 6.67%
Return on Equity = Net Income / Total Equity
ROE = 2 / 20
ROE = 10%
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