PDG Corporation had a return on equity of 18%.Beginning and ending shareholders' equity for the corporation were $570,000 and $560,000 respectively.There were 350,000 common shares and no preferred shares outstanding.What was net income for the year?

Question

Quizplus · Accepted Answer

Net income can be calculated using the return on equity (ROE) formula: ROE = Net Income / Average Shareholders' Equity. Given ROE is 18%, and average shareholders' equity is ($570,000 + $560,000) / 2 = $565,000, net income = 0.18 * $565,000 = $101,700.

PDG Corporation Had a Return on Equity of 18