Question

Shown below are selected data from the financial statements of Noble Computers. (Dollar amounts are in millions, except for the per share data.) Income statement data: Net sales $ 3,500 Cost of goods sold $ 1,890 Operating expenses $ 675 Net income $ 115 Balance sheet data: Average total equity $ 540 Average total assets $ 4,400 Noble reported earnings per share for the year of $6 and paid cash dividends of $2.00 per share. At year-end, the Wall Street Journal listed Noble's capital stock as trading at $81 per share. Noble's return on equity was: Select one: a. 10%. b. 13%. c. 21%. d. 1. 73.

Answer 1

Answer:

c. 21%.

Explanation:

the return on equity will be the net income divided by the total equity

income  115,000,000

equity   540,000,000

return on equity = 0,212962962962963 = 21%

This ratio can e interpretate as follows:

For each dollar invested from owners into the company the ent income increases by 21 cents or it represent 21% of the equity is achieve in earnigns every years.