Question

Apollo Corp. reported the following balance​ sheet: Cash ​$28,000 ​ Accounts payable ​$5,000 Accounts receivable ​15,000 ​ Notes Payable ​12,000 Inventory ​45,000 ​ Accruals ​17,000 Net Fixed Assets ​122,000 ​ LongminusTerms Debt ​45,000 ​ ​ ​ Common Stock ​10,000 ​ ​ ​ Retained Earnings ​121,000 Total assets ​$210,000 ​ Total Liab.​ & Equity ​$210,000 Apollo has sales of​ $600,000 and net income of​ $50,000. Apollo's return on equity is

Answer 1

Apollo's return on equity is 38.17%

Step-by-step explanation:

The formula to compute the return on equity is shown below:

Return on equity = Net income ÷ total equity

where,

Net income = $50,000

And, the total equity is

= Common stock + retained earnings

= $10,000 + $121,000

= $131,000

Now put these values to the above formula

So, the value would equal to

= $50,000 ÷ $131,000

= 38.17%