A company has total assets of $2,000,000 and total liabilities of $1,500,000. During the current year, the company earned $400,000 in net income and paid $200,000 in dividends to its shareholders. The company's stock is currently trading at $50 per share, and the company has 50,000 shares outstanding.

Calculate the following financial ratios for the company:

1. Return on assets (ROA)
2. Return on equity (ROE)
3. Price-to-earnings (P/E) ratio
4. Price-to-book (P/B) ratio

Also, explain what these financial ratios indicate about the company's financial performance.

Answer rating: 100% (QA)

The detailed answer for the above question is provided below Return on assets ROA The return on assets ROA is calculated as the net income divided by the total assets ROA Net income Total assets ROA 4... View the full answer