A company has net income of $5.6 million.Shareholders' equity at the beginning of the year is $32.55 million and,at the end of the year,it is $38.15 million.The only change to shareholders' equity came from net income.The ROE ratio is approximately:

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The Return on Equity (ROE) is calculated as Net Income divided by Average Shareholders' Equity. Average Shareholders' Equity is ($32.55 million + $38.15 million) / 2 = $35.35 million. ROE = $5.6 million / $35.35 million ≈ 0.16 or 16%.

A Company Has Net Income of $5