Calculating Return on Equity for a Firm with $1M in Sales

[karush]

$\textsf{6. A firm with sales of \$1,000,000
net profits after taxes of \$30,000}tex$
$\textsf{total assets of \$1,000,000,
and total liabilities of \$750,000
has a return equity of}$
{A.} 20%
{B.} 15%
{C.} 3%
{D.} 4%

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i tried various ratios but couldn't get the $\%$

 

[MarkFL]

What's that "stuff" in front of the percentages? (Drunk)

 

[karush]

Multiple guess

 

[MarkFL]

Multiple guess

No, I mean these things:



 

[Wilmer]

A firm with sales of 1,000,000
net profits after taxes of 30,000
total assets of 1,000,000
and total liabilities of 750,000
has a return equity of:
A.20%
B.15%
C.3%
D.4%

i tried various ratios but couldn't get the %

Is that the original problem?

How do we know "you tried"? Please show your work
and where you're stuck. Thank you.

 

[MarkFL]

Is that the original problem?

How do we know "you tried"? Please show your work
and where you're stuck. Thank you.

I'd be inclined to format it as follows:

A firm with sales of \$1,000,000, net profits after taxes of \$30,000, total assets of \$1,000,000 and total liabilities of \$750,000 has a return equity of:

A. 20%
B. 15%
C. 3%
D. 4%

Removing the unnecessary carriage returns, and allowing the text to wrap on its own as dictated by the width of a user's device makes the post only as tall as needed. One of my pet peeves is when users use carriage returns to decrease the width of their content (why?), thereby increasing its height. But, I do agree there is no need to use $\LaTeX$ to display text, and no need for those strange characters. (Yes)

 

[karush]

Is that the original problem?

How do we know "you tried"? Please show your work
and where you're stuck. Thank you.

this is what i did
$\frac{1000000+30000}{750000}=1.3733$\\

$\frac{30000}{750000}=\frac{1}{25}=0.04=4\%$

 

[karush]

No, I mean these things:



I do it in overleaf first the brackets from \textbf{}

 

[MarkFL]

I do it in overleaf first the brackets from \textbf{}

Copying/pasting from other places can lead to formatting codes and other stuff being put into your posts, as we saw the other day when you posted raw HTML, and now with these odd characters. If you are going to compose your posts elsewhere rather than just using the editor here, then put the editor in "Source Mode" (the top left button on the toolbar) and you will then see all the extraneous stuff that needs to be removed.

If you make a post and you see stuff that doesn't belong, then I would encourage you to edit your post and remove it then.

According to Wikipedia, the "Return On Equity" (ROE) formula is:

\(\displaystyle \text{ROE}=\frac{\text{Net Income}}{\text{Total Equity}}\)

Since equity is assets less liabilities, I would write:

\(\displaystyle \text{ROE}=\frac{30000}{1000000-750000}=\frac{3}{25}=12\%\)

Obviously, I am doing something wrong...how does your textbook define ROE?

 

[karush]

Actually, the problem just said equity return. ROE was all over the place, so equation was like where what?

I usually compose here first, but then Overleaf does not recognize some of format here. Plus the latex editor here is too small.

 

[MarkFL]

...Plus the latex editor here is too small

Say what?

https://bossip.files.wordpress.com/2016/01/what-you-talkin-bout-willis-quote-1.jpg

Our $\LaTeX$ Live Preview expands/contracts to accommodate whatever you put in there...

View attachment 7414

 

[Wilmer]

Sure hope this thread is placed in the running for "most confusing of the year"...

ROE = Net Income/Shareholders' Equity
ROE is sometimes called "return on net worth."
How it works (Example):

Let's assume Company XYZ generated 10 million in net income last year. If Company XYZ's shareholders' equity equaled 20 million last year, then using the ROE formula, we can calculate Company XYZ's ROE as:

ROE = 10,000,000/20,000,000 = 50%

This means that Company XYZ generated 0.50 of profit for every 1 of shareholders' equity last year, giving the stock an ROE of 50%.

 

[karush]

Say what?Our $\LaTeX$ Live Preview expands/contracts to accommodate whatever you put in there...

It won't expand to 36 or 48 lines, which is common for me.

 

[MarkFL]

It won't expand to 36 or 48 lines, which is common for me.

Yes, 18 lines is the maximum, before scrollbars are added. But, it's not really intended to preview an entire HUGE post, it is intended to preview your $\LaTeX$ expression by expression before adding them to your actual post. So do it in parts. Use $\LaTeX$ for the math, and regular text for everything else, rather than enclosing everything in $\LaTeX$ tags, making your entire post one GIGANTIC expression. ;)

Actually, do it however you want, but please remove characters that don't belong, don't use excessive line breaks that make your post really narrow and tall, and abbreviations (especially in thread titles). Go ahead and type out "Double integral" instead of "dbl int". Thread titles should be searchable and readable.

 

[karush]

the latex enter pane only goes to 14 lines
the preview pane only goes to 20
this is not enough its a pain to scroll all the time

interactive LaTEX editor options are up to 64 lines!
but often cookies won't save work as they claim

also you don't have begin{align} end1{align} which is commonly used we have type or c/p it in
no big but you have begin/end for other stuff

 

[MarkFL]

Okay, I have greatly enlarged the amount to which the elements in the live preview will expand. The input will now handle 1000px of height before scrollbars are introduced, and the output has unlimited height. :)

 

[karush]

Made my day