Sugar Snap Manufacturing has the following information available from its accounting records: The company has no preferred stock.What is the approximate return on equity?
A)20%
B)22%
C)25%
D)234%

Question

Sugar Snap Manufacturing has the following information available from its accounting records:  The company has no preferred stock.What is the approximate return on equity?
A)20% 
B)22% 
C)25% 
D)234%

Quizplus · Accepted Answer

Return on equity = (Net income − Preferred dividends)÷ Average stockholders' equity
= $56,000 ÷ [($230,000 + $280,000)÷ 2] = 22%

Sugar Snap Manufacturing Has the Following Information Available from Its