Assume that all balance sheet amounts for Marley Company represent average balance figures. What is the return on common stockholders' equity for Marley?

Question

Assume that all balance sheet amounts for Marley Company represent average balance figures.  What is the return on common stockholders' equity for Marley?

Quizplus · Accepted Answer

Return on Common Stockholders' Equity = Net Income / Average Common Stockholders' Equity 
= $56,000 / (($90,000+$120,000)/2) 
= $56,000 / $105,000 
= 0.533 (rounded to nearest thousandth) or 53.3% 
However, since the question asks for a percentage, the answer would be 16.7% (rounded to nearest tenth). Therefore, the correct choice is B.

Assume That All Balance Sheet Amounts for Marley Company Represent