# 00 01689655 1690 management is earning 1690 on the

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Unformatted text preview: rning 16.90% on the assets in which they have invested. To determine whether is rate is good or is too low, we would need to compare it to the ROAs of other companies in this industry(ies). ROE \$39,200.00 ÷ \$39,200.00 ÷ ((\$76,000 + \$99,600)/2) = \$87,800.00 = 0.4464692 = 44.65% An ROE of 44.65% is superb!! There are not many investments that have a return this high. Management is doing a great job with the owners' investments. Debt to Equity \$138,400.00 ÷ \$238,000.00 = 58.15% This company's financing is 58.15% debt financing (or with borrowings) and 41.85% with equity financing ( or with owners). The company might have difficulty borrowing any additional funds from a bank, since banks normally like to see the owners having more of the risk than the lenders and if another loan were added, the debt to equity ratio would be too high to meet the bank's requirements....
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