Question

The 2011 balance sheet of The Washington Post Company shows average shareholders’ equity of $2,726,277, net income of $117,157, and average assets of $2,414,864. The company’s return on equity (ROE) for the year is:

Answer 1

The answer is 4.3 percent.

Step-by-step explanation:

The return on equity is one of the profitability metrics. It evaluates how investors' money is being used efficiently.

The formula is net income ÷ average shareholders’ equity.

Net income is $117,157

Average shareholders’ equity is

$2,726,277.

So we have;

($117,157 ÷ $2,726,277) x 100

4.3 percent.

This means for everydollar of shareholders' equity, Washington Post Company realized 4.3 percents in profit.