Katz reports total revenue of $375,650,cost of goods sold of $267,400 and net income of $48,325.Their total assets are $784,325 and total liabilities are $387,775.What is their return on equity (ROE)?

Question

Quizplus · Accepted Answer

ROE = Net Income / Shareholders' Equity 
Shareholders' Equity = Total Assets - Total Liabilities

Therefore, Shareholders' Equity = $784,325 - $387,775 = $396,550

ROE = $48,325 / $396,550 = 0.1219 or 12.19%

Therefore, the answer is B) 12.19%.

Katz Reports Total Revenue of $375,650,cost of Goods Sold of $267,400