Multiple Choice
Which of the following ratios reports net income relative to average stockholders' equity in dollars?
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XYZ Company had net sales during the period of \$380,000 and net income of \$60,000. If total equity was \$480,000 at the beginning of the period and \$720,000 at the end of the period, what is the company's ROE?
A company has income before taxes of \$100,000. Net sales are \$400,000 and gross profit is \$300,000. What is the ROE, assuming the company has a 40% tax rate, and average common equity was \$900,000?