Answer:
= 20.18%
Step-by-step explanation:
The return on equity for AC Motors is simply calculated as follows
Return on Equity (ROE)= Net Income/ Equity x 100
Equity = Total Assets - Total debt
Equity = $523,400- $267,000= $256,400
ROE therefore, = Net Income ($51,750)/ Equity ($256,400)
= (51,750/256,400) x 100
= 20.18%
Return on Equity is simply the measurement of the financial performance of an organisation by looking at the ratio of net income to equity (shareholders fund) at a particular point in time.
The equity is a derived figure by simply deducting total debts from the total assets for that period.