Nicco Corporation had the following accounts at January 1, 2013:
common shares, unlimited number of shares authorized, 18,000 shares issued, $180,000;
preferred shares, $4 cumulative, unlimited number of shares authorized, 1,000 shares issued, $50,000;
retained earnings, $223,000.
The company has profit of $79,000 in 2013 and paid $85,000 in dividends.
Instructions
a. Calculate the return on equity at December 31, 2013.
b. What does this ratio tell you about the corporation?

Question

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The Answer of Nicco Corporation had the following accounts at January 1, 2013:
common shares, unlimited number of shares authorized, 18,000 shares issued, $180,000;
preferred shares, $4 cumulative, unlimited number of shares authorized, 1,000 shares issued, $50,000;
retained earnings, $223,000.
The company has profit of $79,000 in 2013 and paid $85,000 in dividends.
Instructions
a. Calculate the return on equity at December 31, 2013.
b. What does this ratio tell you about the corporation?

Nicco Corporation Had the Following Accounts at January 1, 2013