Table 3.2
Dana Dairy Products Key Ratios Income Statement
Dana Dairy Products
For the Year Ended December 31, 2013 Balance Sheet
Dana Dairy Products
December 31, 2013
-The return on equity for Dana Dairy Products for 2013 was ________. (See Table 3.2)
A) 0.6 percent
B) 5.6 percent
C) 0.9 percent
D) 50 percent

Question

Table 3.2
Dana Dairy Products Key Ratios  Income Statement
Dana Dairy Products
For the Year Ended December 31, 2013  Balance Sheet
Dana Dairy Products
December 31, 2013 
-The return on equity for Dana Dairy Products for 2013 was ________. (See Table 3.2)
A) 0.6 percent 
B) 5.6 percent 
C) 0.9 percent 
D) 50 percent

Quizplus · Accepted Answer

To calculate the return on equity, we need to divide net income by total equity. From the income statement, net income is $280,000. And from the balance sheet, total equity is $5,000,000.

Return on equity = net income / total equity
Return on equity = $280,000 / $5,000,000
Return on equity = 0.056 or 5.6%

Therefore, the answer is B) 5.6 percent.

Table 3.2 Dana Dairy Products Key Ratios Income Statement