The following information is from Acme's annual report for the years ended Dec. 31:

-Refer to the Acme annual report above.Calculate return on equity for 2011.
A)43.2%
B)55.2%
C)32.7%
D)The answer cannot be determined from the information given.

Question

The following information is from Acme's annual report for the years ended Dec. 31:

-Refer to the Acme annual report above.Calculate return on equity for 2011.
A)43.2% 
B)55.2% 
C)32.7% 
D)The answer cannot be determined from the information given.

Quizplus · Accepted Answer

Return on equity (ROE) is calculated as net income divided by average shareholders' equity. From the annual report, we can see that net income for 2011 was $72,000 and average shareholders' equity was $130,400. Therefore, ROE for 2011 is:
ROE = Net Income / Average Shareholders' Equity
ROE = $72,000 / $130,400
ROE = 0.552, or 55.2%

The Following Information Is from Acme's Annual Report for the Years