Crasler Company's net income last year was $100,000.The company paid dividends on preferred shares of $20,000,and its average common shareholders' equity was $580,000.The company's return on common shareholders' equity for the year was closest to which of the following?

Question

Quizplus · Accepted Answer

Return on common shareholders' equity = (Net Income - Preferred dividends) / Average common shareholders' equity
= ($100,000 - $20,000) / $580,000
= $80,000 / $580,000
= 0.1379
= 13.79%
The closest option is B, 13.8%.

Crasler Company's Net Income Last Year Was $100,000