Answer:
The return on assets in this business for Macrosoft is
ROA = 10.50%
Step-by-step explanation:
Return on Equity:
ROE represents how much a firm is generating profits by using the shareholder's money.
ROE is calculated as
[tex]$ {ROE = \frac{Annual \:\: net\: \: income}{Average \:\: shareholder's \:\: equity} $[/tex]
Return on Assets:
ROA represents how much a firm is generating profits for every dollar of its assets.
ROA is calculated as
[tex]$ {ROA = \frac{Annual \:\: net\: \: income}{Total \:\: assests} $[/tex]
What is the return on assets in this business if Macrosoft has no debt?
Debt plays an important role in the calculations of return on assets.
We know that
Assets = Liabilities + Equity
Since the Macrosoft has no debt, its return on assets will be same as return on equity.
Assets = Equity
ROA = ROE
ROA = 10.50%
