Question

if equity is $2 million and total revenue is $1.3 million, then roe is

incalculable without net profit data

35%

65%

incalculable without ebit data

Explanation:

Return on Equity (ROE) is calculated as \(\text{ROE}=\frac{\text{Net Profit}}{\text{Equity}}\times100\%\). The problem provides equity (\$2 million) and total revenue (\$1.3 million), but net profit is not given. Revenue is not the same as net profit (net profit accounts for expenses, taxes, etc.). So, we can't calculate ROE without net profit data. EBIT (Earnings Before Interest and Taxes) is also not needed for ROE calculation directly, as ROE uses net profit.

Answer:

A. incalculable without net profit data