Return on assets = 5.5%, Total assets Rs 3,000 and common equity Rs 1,050 then return on equity would be

Solution (By Examveda Team)

Return on assets (ROA) shows how efficiently a company uses its assets to generate earnings. It's calculated as Net Income divided by Total Assets.

Return on equity (ROE) shows how well a company uses shareholder investments to generate profit. It's calculated as Net Income divided by Shareholder Equity (Common Equity in this case).

We are given ROA = 5.5%, Total Assets = Rs 3,000, and Common Equity = Rs 1,050.

First, let's find the Net Income using the ROA formula: ROA = Net Income / Total Assets

0.055 = Net Income / 3000

Net Income = 0.055 * 3000 = Rs 165

Now, we can calculate the ROE using the Net Income we just found:

ROE = Net Income / Common Equity

ROE = 165 / 1050

ROE = 0.1571 or 15.71%

Therefore, the correct answer is Option B: 15.71%. The other options are incorrect calculations or units.