Calculate the company return on assets ratio

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Zoom Company currently has $500 million of assets $160 million of debt, and Net income last year was $12 million. Calculate the company's return on assets ratio and debt/equity ratio under the following assumptions or changes:

1. No changes in above.

2. Assuming the company had leased $30 million of its assets "off the balance sheet."

3. Assuming the company had leased $60 million of its assets "off the balance sheet."

4. Assuming the company had leased $90 million of its assets "off the balance sheet."

Based on a review of your calculations for the financial ratios above, explain why a firm might want to engage in "off balance sheet" financing.

Reference no: EM132384773

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