Profitability Ratios: Meade Publications is a magazine publisher established in

Question

Profitability Ratios:

Meade Publications is a magazine publisher established in Southern California. Financial analysts are concerned about Meade's ability to generate positive returns as printed material becomes less popular than digital material. Financial analysts observe the following account balances from Meade to determine financial ratios:

Revenue $1,485,000

Expenses 910,000

Net income 507,500

Assets 937,500

Liabilities 227,500

Average equity 840,000

Required: Compute Meade's return on equity. Round your answer to one decimal place. ________%?

Explanation / Answer

Meade's return on equity=Net income 507,500/Average equity 840,000=60.4%

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