Question

John Inc. is a manufacturing business. For a given accounting period, the business’s total revenue amounted to $75,000, while its expenses came to $35,000. The total shareholders’ equity on the businesses balance sheet was $150,000. What is John Inc.’s return on equity for this accounting period?

A.
16.66 percent
B.
26.66 percent
C.
36.66 percent
D.
46.66 percent

Answer 1

John Inc.'s return on equity for this accounting period is:

B.

26.66 percent

Step-by-step explanation:

Return or equity is a ratio used to calculate the efficiency of a certain business. It is calculated by dividing the net income on the stockholders' equity. Therefore, in our case, we translate this into 40 000 dollars divided into 150 000. Giving us a result of .26 %. Thus, the correct option is the B. option.