Question

The 2016 balance sheet of E.I. du Pont de Nemours and Company shows average DuPont shareholders’ equity attributable to controlling interest of $9,996 million, net operating profit after tax of $2,308 million, net income attributable to DuPont of $2,513 million, and common shares issued of 950.044 million. Assume the company has no preferred shares issued. DuPont's return on equity (ROE) for the year is: A. 30.7% B. 37.6% C. 25.1% D. 36.4% E. There is not enough information to calculate the ratio.

Answer 1

Answer:

C) 25.1%

Explanation:

Return on Equity(ROE): It is a profitability ratio calculated to show how much company has profited from the investment of the shareholders.

• Formula:

$ROE= \frac{Net Income}{Shareholder's Equity}$

• Given Data:

Net Income: $2,513 M

Shareholder's Equity: $9,996 M

• Substituting the values in the formula:

$ROE= \frac{2,513}{9,996} = 0.251 = 25.1%$