Neef Corporation has provided the following financial data from its balance sheet and income statement:

-The company's return on equity for Year 2 is closest to:
A) 67.25%
B) 2.27%
C) 1.47%
D) 4.19%

Question

Neef Corporation has provided the following financial data from its balance sheet and income statement:
  
-The company's return on equity for Year 2 is closest to:
A) 67.25% 
B) 2.27% 
C) 1.47% 
D) 4.19%

Quizplus · Accepted Answer

Return on equity = Net income ÷ Average stockholders' equity*
= $13,000 ÷ $882,500 = 1.47% (rounded)
*Average stockholders' equity = ($885,000 + $880,000) ÷ 2 = $882,500

Neef Corporation Has Provided the Following Financial Data from Its