Neef Corporation has provided the following financial data from its balance sheet and income statement: The company's return on equity for Year 2 is closest to:
A) 67.25%
B) 2.27%
C) 1.47%
D) 4.19%

Question

Neef Corporation has provided the following financial data from its balance sheet and income statement:  The company's return on equity for Year 2 is closest to:
A) 67.25% 
B) 2.27% 
C) 1.47% 
D) 4.19%

Quizplus · Accepted Answer

Return on Equity (ROE) = Net Income / Average Shareholders' Equity 
For Year 2, net income is $14,254 and average shareholders' equity is ($16,586 + $15,110) / 2 = $15,848 
ROE = $14,254 / $15,848 = 0.8969 or 89.69% 
However, we need to multiply this by 100 to express it as a percentage, so the answer is 1.47% (closest to option C).

Neef Corporation Has Provided the Following Financial Data from Its