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Return on Common Equity Question
Guys/Gals..
I got stumped on this question, I know the formula but I cannot figure out how to pull the inputs from the data given. Any help would be great.
Company Balance Sheet
As of December 31, 20XX
Year 1 – Year 2
Cash: $2,000 – $2,200
Account Receivables: $3,000 – $3,500
Inventory: $4,000 – $4,200
Total Current Assets: $9,000 – $9,900
Fixed assets at cost: $22,000– $24,300
accumulated depreciation: $9,000 – $10,500
Net Fixed Assets: $13,000 – $13,800
Total Assets: $22,000 – $23,700
Q: Return on common equity for year 2 was closest to:
a. 62 %
b. 51 %
c. 43 %
Answer is b. 51% they show the formula as Net Income Preferred Div. / Avg. Common Equity. For the formula they have $1860 0/ ($3000 + 4,296)/2 = 51%
I went back through the FRA book to find how to solve I couldn’t find it any where. Please help me on how to get to the answer. Thanks. |
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发表于 2013-4-1 12:17
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