The following information is available for Aerius Corporation for the current year: Beginning of year:
End of year:
The return on equity for Aerius Corporation is:

Question

The following information is available for Aerius Corporation for the current year:  Beginning of year:
 End of year:
 The return on equity for Aerius Corporation is:

Quizplus · Accepted Answer

Return on Equity = Net Income / Average Shareholder's Equity
Average Shareholder's Equity = (Beginning Shareholder's Equity + Ending Shareholder's Equity) / 2

Given information:
Beginning Shareholder's Equity = $700,000
Ending Shareholder's Equity = $900,000
Net Income = $280,000

Average Shareholder's Equity = ($700,000 + $900,000) / 2 = $800,000

Return on Equity = $280,000 / $800,000 = 0.35 or 35%

Therefore, the correct answer is C) 33.5%.

The Following Information Is Available for Aerius Corporation for the Current