What is the return on equity if sales are $140,000, net income is $22,700 and average common Stockholders' Equity is $86,000? (Round your final answer to one decimal place, X.X%.)

Question

Quizplus · Accepted Answer

Return on Equity (ROE) is calculated as net income divided by average common Stockholders' Equity, then multiplied by 100 to get a percentage. Using the given figures:

ROE = (Net Income / Average Common Stockholders' Equity) x 100
ROE = ($22,700 / $86,000) x 100
ROE = 26.4%

Therefore, the answer is B) 26.4%.

What Is the Return on Equity If Sales Are $140,000