Calculate the return on equity given the following information: common shares outstanding = 250,000; earning per share = $2.00; total assets = $2,000,000; total equity = $800,000.
A) 61.50%
B) 62.50%
C) 63.50%
D) 64.50%
E) 65.50%

Question

Quizplus · Accepted Answer

Return on Equity (ROE) is calculated as Net Income divided by Shareholder's Equity. Given that Earnings Per Share (EPS) is $2.00 and there are 250,000 common shares outstanding, the Net Income is $2.00 * 250,000 = $500,000. With total equity of $800,000, ROE = ($500,000 / $800,000) * 100 = 62.50%.

Calculate the Return on Equity Given the Following Information: Common