The company’s return on equity is 25%.
Company's sales- $56 million
Net income- $19 million
Total assets- $109 million
Total liabilities- $33 million
Total equity= Company's sales + Net income
$56 million + $19 million = $75 million
Thus, Return On Equity (ROE) = Net Income/Equity = $19 million / $75 million= 25%
Return On Equity (ROE) is a measure of management's ability to generate income from the equity available to it. It is used for comparing the performance of companies in the same industry. Thus, ROEs of 15–20% are generally considered good.
Hence, the company’s return on equity is 25%.
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