Given the following information calculate the return on equi

Given the following information, calculate the return on equity for Chaus, Inc.:
Return on Sales= 5%
Total asset turnover = 2
Debt ratio = .73

14%

7.3%

37%

21%

Solution

Net Income is defined as return on sales * Total asset turnover

=> 5% * 2 = 10/100 = 0.1

Book value = Assets value - Debt values

=> 1 - 73%

=> 0.37

ROE = Net icome/Book value

=> 0.1/0.37

=> .0.27027 = 27%

Hence the correct answer is Option D