Answer:
38.96%
Explanation:
Return on equity is computed as = (Net income / Shareholder's equity) × 100
But,
Net income = Sales - costs - depreciation - interest (1 - tax rate)
Net income = $367,400 - $183,600 - $48,600 - $39,200 (1 - 25%)
Net income = $72,000
Current asset = Total assets - Net fixed assets
Current asset = $422,100 - $264,500
Current asset = $157,600
Net working capital = Current asset - Current liabilities
$22,300 = $157,600 - Current liabilities
Current liabilities = $135,300
Total liabilities = long term debt + Current liabilities
Total liabilities = $102,000 + $135,300
Total liabilities = $237,300
Shareholder's equity = Total assets - Total liabilities
Share holder's equity = $422,100 - $237,300
Shareholder's equity = $184,800
Return on equity = ($72,000/$184,800) × 100
Return on equity = 38.96%
