Question

Nikko Corp.'s total common equity at the end of last year was $290,000 and its net income after taxes was $60,000. What was its ROE?

Select the correct answer.

a. 20.69%
b. 19.19%
c. 19.69%
d. 20.19%
e. 18.69%

Answer 1

Answer:

19.69%

Explanation: ROE is the return on equity on the given stock. It is calculated as net income divided by the total common equity of the company. Return on equity (ROE) is a very useful for the investors to look for the investment in the company.

In the following question, Nikko Corporation has the following figures:

Total common equity = $305,000

Net Income after taxes = $60,000

Return on Equity = \frac{Net Income after taxes}{Total common equity}ReturnonEquity=TotalcommonequityNetIncomeaftertaxes

Return on equity = \frac{$60,000}{$305,000}

Return on equity = 19.69%

Therefore, Nikko Corp's total return on equity (ROE) is 19.69%

Explanation:

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