Answer :
Answer:
7.55%
Explanation:
The debt ratio shows the percentage of a company's assets that are provided via debt. It is the ratio of total liabilities to total assets, it is given by the equation:
Debt ratio = total liabilities/total assets
Given that total debt of $321,000, hence the total liability = $321000, and debt ratio = 0.61. Therefore:
Debt ratio = total liabilities/total assets
0.61 = $321000/total asset
total asset = $321000/0.61
total asset = $526230
Net income = $39,750, the company’s return on equity is given by:
Return on equity = Net income / shareholder equity
Return on equity = $39750 / $526230
Return on equity = 0.0755
Return on equity = = 7.55%