Question

50 POINTS!!!

Excerpts from TPX Company's December 31, 2021 and 2020, financial statements are presented below:


2021 2020
Accounts receivable $ 83,000 $ 75,000
Inventory 95,000 72,000
Net sales 480,000 377,000
Cost of goods sold 257,000 223,000
Total assets 825,000 750,000
Total stockholders' equity 480,000 455,000
Net income 80,000 51,000

TPX Company's 2021 return on equity is: (Round your answer to 1 decimal place.)

Multiple Choice

1.4%.


3.1%.


17.1%.


16.7%.

Answer 1

The return on equity (ROE) for TPX Company in 2021 is calculated by dividing the net income by the total stockholders' equity, resulting in 16.7%.

Step-by-step explanation:

To calculate the return on equity (ROE) for TPX Company for the year 2021, use the formula:
ROE = Net Income / Shareholder's Equity.

Based on TPX Company's financial statements, the net income for 2021 is $80,000, and the total stockholders' equity is $480,000. Plugging these numbers into the formula gives us:

ROE = $80,000 / $480,000 = 0.1667, or 16.7% when converted to a percentage and rounded to one decimal place.

Therefore, the correct answer is 16.7%.