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If total debt represented 40 of its total average assets

Question - Morgan Company earned a 7.5% net income margin on sales last year. Its asset turnover ratio was 2.5 and its average total assets were $12 million. If total debt represented 40% of its total average assets last year, what was the Return on Equity (ROE) for Morgan Company last year?

A) 31.25%

B) 18.75%

c) 46.88%

D) 16.00%

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Accounting Basics: If total debt represented 40 of its total average assets

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Accounting Basics: If total debt represented 40 of its total average assets

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