Chapter 15, Problem 15.1.2MBA

### Survey of Accounting (Accounting I)

8th Edition
Carl Warren
ISBN: 9781305961883

Chapter
Section

### Survey of Accounting (Accounting I)

8th Edition
Carl Warren
ISBN: 9781305961883
Textbook Problem

# Financial leverageMicrosoCortrepotied (MSFT) reported the following data (in millions) for a tern year Compute the return on stockholders’ equity. Round to one decimal place.

To determine

Concept Introduction:

Return on Equity:

Return on Equity is the rate of return earned by the Stockholders on their investment in the company. It is calculated with the help of following formula:

Return on Equity = Net IncomeAverage Stockholders Equity

The Average stock holder's equity calculated with the help of following formula:

Average stock holders equity=( Beginning stock holders equity + Ending stock holders equity)2

To Calculate:

The Return on Stockholder's equity

Explanation

The Return on Stockholder's equity is calculated as follows:

 $in Millions Operating Income (A)$ 1...

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