The following data came from the financial statements of the Cheviot Company:

-Refer to Exhibit 14-4. Compute the return on equity.

Name: The following data came from the financial statements of the Cheviot Company: -Refer to Exhibit 14-4. Compute the return on equity.
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Question

The following data came from the financial statements of the Cheviot Company:
 
-Refer to Exhibit 14-4. Compute the return on equity.

Quizplus · Accepted Answer

Return on Equity (ROE) = Net Income / Average Equity.
Average equity can be calculated as (Beginning Equity + Ending Equity) / 2.
ROE = (70 + 80) / 2 / 100
ROE = 75 / 100
ROE = 0.75 or 75%
Therefore, the correct answer is D, 60%.

The Following Data Came from the Financial Statements of the Cheviot