Use the following information to answer questions
Green Thumb Garden Supplies reported the following information for 2012 and 2013.
-What is the return on common shareholders' equity for 2013?
A)4.5%
B)17.1%
C)18.5%
D)20.0%

Question

Use the following information to answer questions 
Green Thumb Garden Supplies reported the following information for 2012 and 2013. 
-What is the return on common shareholders' equity for 2013?
A)4.5% 
B)17.1% 
C)18.5% 
D)20.0%

Quizplus · Accepted Answer

Return on common shareholders' equity for 2013 can be calculated by dividing net income after taxes by the average common equity. 
Return on common shareholders' equity for 2013 = (Net income after taxes / Average common equity) x 100 
= (88,000 / ((220,000 + 250,000)/2)) x 100 
= (88,000 / 235,000) x 100 
= 37.45 
Therefore, the return on common shareholders' equity for 2013 is 18.5%. The best choice is C.

Use the Following Information to Answer Questions