Profitability and Asset Management Ratios You Are Thinking of Investing

question 60

Multiple Choice

Profitability and Asset Management Ratios You are thinking of investing in Tikki's Torches, Inc. You have only the following information on the firm at year-end 2011: net income = $500,000, total debt = $12 million, and debt ratio = 40%. What is Tikki's ROE for 2011?

• A) 1.67%
• B) 2.78%
• C) 4.17%
• D) 10.42%

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Definitions:

Property

Assets or possessions, either tangible or intangible, owned by individuals or entities.

Restrictive Covenant

A promise to use or not to use one’s land in particular ways.

Homeowners' Association

An organization in a subdivision, planned community, or condominium building that makes and enforces rules for the properties and its residents.

Rentals

Payments made periodically for the use of someone else's property or equipment.