The Amer Company has the following characteristics: What is Amer's ROE?
A) 11.04%
B) 12.31%
C) 16.99%
D) 28.31%
E) 30.77%

Question

The Amer Company has the following characteristics:  What is Amer's ROE?
A) 11.04% 
B) 12.31% 
C) 16.99% 
D) 28.31% 
E) 30.77%

Quizplus · Accepted Answer

To calculate ROE, we need to divide the net profit (which is the same as net income) by shareholder's equity. Looking at the financial characteristics given, we can see that the net profit is $59.5 million and the shareholder's equity is $350 million. 
ROE = (Net Profit / Shareholder's Equity) x 100
ROE = (59.5 / 350) x 100 = 16.99% 
Therefore, the best choice is C, which is 16.99%.

The Amer Company Has the Following Characteristics: What Is