Katz reports total revenue of $245,600,cost of goods sold of $18,950 and net income of $121,000.Their total assets are $585,000 and total liabilities are $250,000.What is their return on equity (ROE)?

Question

Quizplus · Accepted Answer

ROE is calculated as Net Income / Shareholder's Equity. Shareholder's Equity can be found by subtracting total liabilities from total assets, which is $585,000 - $250,000 = $335,000. Then, ROE = $121,000 / $335,000 = 0.36119402985, or 36.12% when converted to a percentage.

Katz Reports Total Revenue of $245,600,cost of Goods Sold of $18,950