L & S have invested $80,000 and $100,000 in a partnership.L's beginning capital investment is $80,000 and S initial capital investment is $100,000.Their ending capital balances were $85,000 and $105,000 respectively.L's share of net income was $6,000 .What is L partners return on equity

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Quizplus · Accepted Answer

L's return on equity is calculated as (Net Income / Average Capital) * 100. L's average capital is ($80,000 + $85,000) / 2 = $82,500. Therefore, L's return on equity is ($6,000 / $82,500) * 100 = 7.27%, which rounds to 7%.

L & S Have Invested $80,000 and $100,000 in a Partnership.L's