At the End of 2014, Jared Corporation Reported a Return

question 13

Essay

At the end of 2014, Jared Corporation reported a return on assets of 16%; net income of $42,000; average total assets of $365,000, and average total liabilities of $165,000.
Required:
What was Jared's financial leverage percentage?

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Definitions:

Reserve Requirement

The reserve requirement is the minimum amount of reserves that banks must hold against deposits, set by monetary authorities to control the money supply.

Required Reserves

The minimum amount of funds that a bank must hold in reserve against deposit liabilities, as mandated by central banking regulations, to ensure liquidity and stability in the banking system.

Excess Reserves

The surplus of reserves held by banks over and above the regulatory requirements, often indicating caution or a lack of lending opportunities.

Easy Money Policy

A monetary policy strategy aimed at increasing the money supply to stimulate economic growth by lowering interest rates.