Series 79 practice questioneasyProfitability Ratios
A company reports net income of $50 million and average shareholders' equity of $250 million. What is its return on equity (ROE)?
- A5%
- B10%
- C20%✓ Correct answer
- D12%
Explanation
Why C — 20%
ROE = Net Income / Average Shareholders' Equity = $50M / $250M = 0.20 or 20%. Therefore, C is correct.
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