Sealy Corporation had the following information in its financial statements for the years ended 2014 and 2015: What is the rate of return on common stock equity for Sealy Corporation for the year ended 2015?

Question

Sealy Corporation had the following information in its financial statements for the years ended 2014 and 2015:  What is the rate of return on common stock equity for Sealy Corporation for the year ended 2015?

Quizplus · Accepted Answer

The rate of return on common stock equity for the year ended 2015 can be calculated as: 
Net Income / Average Common Shareholders' Equity
= ($21,200 + $7,100) / [(($338,500 + $343,000) / 2)]
= $28,300 / $340,750
= 8.3%
Therefore, the answer is closest to C) 7.0%.

Sealy Corporation Had the Following Information in Its Financial Statements