The Destin Company reported net income of $50,000 on sales of $300,000. The company has total assets of $500,000 and total liabilities of $100,000. What is the company's return on equity ratio?
A)10.0%
B)12.5%
C)16.7%
D)50.0%

Question

Quizplus · Accepted Answer

The return on equity ratio is: net income/average stockholders' equity. Assets ($500,000) - liabilities ($100,000) = stockholders' equity ($400,000). $50,000/$400,000 = .125.

The Destin Company Reported Net Income of $50,000 on Sales