25) Given these facts, calculate return on equity:   Sales................................................ $8,200,000   Net Income............................................ 2,050,000   Average Total Assets.............................................. 7,100,000   Average Total Liabilities........................................ 3,500,000   A. 0.29.   B. 0.57.   C. 0.65.   D. 0.71

College Accounting, Chapters 1-27 (New in Accounting from Heintz and Parry)
22nd Edition
ISBN:9781305666160
Author:James A. Heintz, Robert W. Parry
Publisher:James A. Heintz, Robert W. Parry
Chapter15: Financial Statements And Year-end Accounting For A Merchandising Business
Section: Chapter Questions
Problem 4CE
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25) Given these facts, calculate return on equity:

 

Sales................................................

$8,200,000

 

Net Income............................................

2,050,000

 

Average Total Assets..............................................

7,100,000

 

Average Total Liabilities........................................

3,500,000

 

A.

0.29.

 

B.

0.57.

 

C.

0.65.

 

D.

0.71.

Expert Solution
Step 1

Average equity = Average total assets - Average liabilities

Return on equity = Net income/Average equity

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