CFA Level 1
Financial Reporting and Analysis
Understanding ROE and Debt to Equity Ratio
Hard Analysis Techniques Ratio Analysis
XYZ Corporation has reported the following financial information for the year 2022:
- Net Income: $800,000
- Total Revenue: $5,000,000
- Total Assets: $4,000,000
- Total Liabilities: $2,500,000
- Shareholders' Equity: $1,500,000
Using this information, calculate the Return on Equity (ROE) and the Debt to Equity ratio. Which of the following statements is TRUE regarding these ratios?
Hint
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