Calculate the return on equity given the following information: common shares outstanding = 300,000; earning per share = $4.00; total assets = $5,000,000; total equity = $3,000,000.
A) 40%
B) 41%
C) 42%
D) 43%
E) 44%

Question

Quizplus · Accepted Answer

Return on Equity (ROE) is calculated as Net Income divided by Shareholder's Equity. Given earnings per share (EPS) of $4.00 and 300,000 shares outstanding, Net Income = 4 * 300,000 = $1,200,000. With total equity of $3,000,000, ROE = ($1,200,000 / $3,000,000) * 100 = 40%.

Calculate the Return on Equity Given the Following Information: Common