Question

rogen Grocer's 2016 balance sheet shows average stockholders’ equity of $12,000 million, net operating profit after tax of $1,140million, net income of $380 million, and common shares issued of $1,916 million. The company has no preferred shares issued. Krogen Grocer’s return on common stockholders’ equity for the year is: Select one: A. 6.33% B. 15.97% C. 9.50%

Answer 1

Answer: 3.17%

Explanation:

Given the Net Income and the Average stockholders' equity as well as an assumption that no preferred stock was issued, we can use the following formula to calculate for Return on Common Stockholders' Equity,

Return on Common Stockholders' Equity = Net income/Average stockholders’ equity

= 380 / 12,000

= 0.031667

= 3.17 %

Krogen Grocer’s return on common stockholders’ equity for the year is 3.17%.

I don't see it in the options so the options might be incomplete but this is the correct answer.