Answer:
return on stockholders’ equity = 18.63 %
Explanation:
given data
sale = $4,430,000
earns = 2 %
assets = 4.5 times per year
current liabilities = $167,000
long term liabilities = $342,000
to find out
return on stockholders’ equity
solution
we get here Net profit will be here
net profit = 4,430,000 × 2 %
net profit = $88600
and
Total assets is = [tex]\frac{4,430,000}{4.5}[/tex]
Total assets = $984444.44
and
stockholders’ equity will be
stockholders’ equity = $984444.44 - $167,000 - $342,000
stockholders’ equity = $475444.44
so
return on stockholders’ equity = [tex]\frac{88600}{475444.44}[/tex]
return on stockholders’ equity = 0.186352
return on stockholders’ equity = 18.63 %
