Question

Zero Corp's total common equity at the end of last year was $405,000 and its net income was $70,000. What was its ROE?a. 14.82%b. 15.60%c. 16.42%d. 17.28%e. 18.15%

Answer 1

D. 17.28%

Step-by-step explanation:

In Return on Equity ROE is a financial ratio that it is recommended to be calculated as the earnings of the current period divided by the average of the equity (equity at the end of period + equity at the beginning and divide it by 2) In this case we only have end of period and we will use it as denominator so.

ROE = 70.000/405.000

ROE = 17.28%