Question

Nikko corp.'s total common equity at the end of last year was $305,000 and its net income after taxes was $60,000. What was its roe?

Answer 1

Answer: 19.67%

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

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

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

Return on equity = 19.67%

Therefore, Nikko Corp's total return on equity (ROE) is 19.67%