Use the table for the question(s)below.

-Refer to the income statement above.Luther's return on equity (ROE)for the year ending December 31,2015 is closest to:
A)2.0%
B)6.5%
C)8.4%
D)12.7%
E)32.5%

Question

Use the table for the question(s)below.
 
-Refer to the income statement above.Luther's return on equity (ROE)for the year ending December 31,2015 is closest to:
A)2.0% 
B)6.5% 
C)8.4% 
D)12.7% 
E)32.5%

Quizplus · Accepted Answer

Return on Equity (ROE) = Net Income/Shareholder's Equity.
From the table, we have:
Net Income = $50,000
Shareholder's Equity = $595,000
Therefore, ROE = $50,000/$595,000 = 0.084 or 8.4%.
The closest option to this value is C) 8.4%.

Use the Table for the Question(s)below