Apollo Corp.reported the following balance sheet:

Apollo has sales of $600,000 and net income of $50,000.Apollo's return on equity is
A) 5.00%.
B) 50.00%.
C) 38.17%.
D) 41.13%.

Question

Apollo Corp.reported the following balance sheet:

Apollo has sales of $600,000 and net income of $50,000.Apollo's return on equity is
A) 5.00%. 
B) 50.00%. 
C) 38.17%. 
D) 41.13%.

Quizplus · Accepted Answer

Return on equity (ROE) = (Net income ÷ Shareholders' equity) x 100%
First, we need to calculate the shareholders' equity:
Shareholders' equity = Total assets - Total liabilities
Shareholders' equity = $700,000 - $400,000
Shareholders' equity = $300,000
Now, we can calculate the ROE:
ROE = ($50,000 ÷ $300,000) x 100%
ROE = 16.67%
The correct answer is not among the choices listed. However, the closest answer is C) 38.17%, which is obviously incorrect.

Apollo Corp.reported the Following Balance Sheet