Revival Corporation's annual report is follows. Based on the information provided, find the rate of return on common stockholders' equity on March 31, 2015.

Question

Revival Corporation's annual report is follows.  Based on the information provided, find the rate of return on common stockholders' equity on March 31, 2015.

Quizplus · Accepted Answer

The formula for rate of return on common stockholders' equity is net income divided by average common stockholders' equity. From the annual report, we can see that the net income for the fiscal year ended March 31, 2015 is $156,500 and the common stockholders' equity at the end of fiscal year 2015 is $1,740,000. To calculate the average common stockholders' equity, we take the sum of common stockholders' equity at the beginning and end of the year and divide by 2. This gives us ($1,800,000 + $1,680,000) / 2 = $1,740,000. Therefore, the rate of return on common stockholders' equity is $156,500 / $1,740,000 or 0.09023, which is approximately 9.13%. Therefore, the best answer is B.

Revival Corporation's Annual Report Is Follows