Answer:
Find the answers in the explanation section below
Explanation:
The return on equity for each of the partners and the firm in total is the net income for the year divided by average capital invested in the business in the year.
Average capital or equity is the beginning balance plus ending balance divided by 2:
Hockey LP:
Annual net income is $36,664
average equity=($345,000+$381,664)/2=$363,332
return on equity= $36,664/$363,332
=10.09%
Football LP:
Annual net income is $751,612
average equity=($1,414,500+ $2,046,112)/2=$1,730,306
return on equity=$751,612/$1,730,306
=43.44%
Rugged sports:
Annual net income is $788,276
average equity=($1,759,500+ $2,427,776)/2=$2093638
return on equity=$788276/$2093638
=37.65%
