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
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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