What is the return on equity if sales are $100,000,net income is $22,700,beginning Stockholders' Equity is $88,000,and ending common Stockholders' Equity is $84,000?

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Quizplus · Accepted Answer

Return on equity (ROE) is calculated as Net Income divided by Average Stockholders' Equity. Average Stockholders' Equity is ($88,000 + $84,000) / 2 = $86,000. ROE = $22,700 / $86,000 = 0.264 or 26.4%.

What Is the Return on Equity If Sales Are $100,000,net