ROE current, start, equity

AndyNZ

MOck PM Q29

they calculate ROE by NI/ last year equity plus this yrs earning plus adjustment

i thought ROE we are checking how much this yrs NI is returing on what we had as equity at the start. why add current retained earings for the current year?

lucasg85

Did they take the average equity maybe? I'm too lazy to look it up.

If nothings specified you should take NI/Average equity

not sure if that helps

random_walker47

no it was not averages. pls stop being too lazy check and help a freind inneed.

wxs1986

thanks June, i reckon its yr end balances by why add the NI to equity? thats the part i don't understand.

tianxin

begining equity + ni = ending equity right? (assuming no divs)

the question is really just asking you to compute ending equity under all current method.

So take old equity (old rates) and add to it the new NI (average rates) and compute the CTA (plug figure is a bit tricky) to get ending equity.