Last year, Mainline Corporation's gross profit was $5 million, its net income was $2 million, and operating expenses were $1 million. Its owners' equity is $100 million. Its return on equity is therefore 2 percent.

Question

Quizplus · Accepted Answer

The return on equity is calculated by dividing the net income by the owners' equity. In this case, the return on equity is $2 million / $100 million = 2%.

Last Year, Mainline Corporation's Gross Profit Was $5 Million, Its