Use the information above to answer the following question.If net income for 2015 is $120,000,which of the following is closest to the company's return on equity for 2015?
A)20%
B)14.5%
C)15.7%
D)13.3%

Question

Use the information above to answer the following question.If net income for 2015 is $120,000,which of the following is closest to the company's return on equity for 2015? 
A)20% 
B)14.5% 
C)15.7% 
D)13.3%

Quizplus · Accepted Answer

Return on equity (ROE) = Net Income / Shareholders' Equity
ROE for 2015 = 120,000 / 765,000 = 0.1568 or 15.7% (rounded to one decimal place)
Therefore, the closest answer is C) 15.7%.

Use the Information Above to Answer the Following Question