Find the ratio of net income after taxes to average owner's equity. Round to the nearest tenth of a percent.
-Owner's equity at beginning of year: $614,000. Owner's equity at end of year: $2,058,000. Net income after taxes: $316,500.
A)51.6%
B)51.5%
C)23.7%
D)15.4%

Question

Quizplus · Accepted Answer

To find the ratio of net income after taxes to average owner's equity, first calculate the average owner's equity: ($614,000 + $2,058,000) / 2 = $1,336,000. Then, divide the net income after taxes by the average owner's equity: $316,500 / $1,336,000 ≈ 0.237 or 23.7%.

Find the Ratio of Net Income After Taxes to Average