Garrott Corporation's total assets were $1,505,000 at the end of Year 2 and $1,520,000 at the end of Year 1.Its total stockholders' equity was $1,197,000 at the end of Year 2 and $1,180,000 at the end of Year 1. The company's return on equity for Year 2 is closest to:

Question

Garrott Corporation's total assets were $1,505,000 at the end of Year 2 and $1,520,000 at the end of Year 1.Its total stockholders' equity was $1,197,000 at the end of Year 2 and $1,180,000 at the end of Year 1.  The company's return on equity for Year 2 is closest to:

Quizplus · Accepted Answer

Return on equity = Net income ÷ Average stockholders' equity*
= $25,100 ÷ $1,188,500 = 2.11% (rounded)
*Average stockholders' equity = ($1,197,000 + $1,180,000)÷ 2 = $1,188,500

Garrott Corporation's Total Assets Were $1,505,000 at the End of Year