Question

The financial statements of Colorado Outfitters include the following selected data ($ in millions): sales, $9,543; net income, $320; beginning stockholders' equity, $3,219; and ending stockholders’ equity, $2,374. Calculate the return on equity. (Enter your answer in millions. For example, $5,500,000 should be entered as 5.5. Round your intermediate calculations and final answers to 1 decimal place.)

Answer 1

11.4%

Step-by-step explanation:

Return on equity = Net income ÷ Average stockholder equity

$320÷ $2,796.5

=11.4%

Average stockholders’ equity ($3,219 + $2,374)/2

=$5,493/2

= $2,796.5

Therefore the return on equity is 11.4%