The 2016 balance for Mason Electronics reported the following items long dash— w

Question

The 2016 balance for Mason Electronics reported the following items long dash— with 2015 figures given for comparison: Mason Electronics Balance Sheet As of December 31,2016 Mason Electronics Balance Sheet As of December 31,2015 Total Assets $571,000 $494,000 Total Liabilities 330,000 284,000 Total Stockholders' Equity (all common) 241,000 210,000 Total Liabilities and Stockholders' Equity $571,000 $494,000 Net income for 2016 was $25,000. Compute the rate of return on common stockholders' equity for 2016.

A. 4.38%

B.

10.37%

C.

11.09%

D.

4.69%

Explanation / Answer

Compute the rate of return on common stockholders' equity for 2016.

Rate of return on common stockholder's equity = Net income*100/average shareholder's equity

Average shareholder's equity = (241000+210000/2) = 225500

Rate of return on common stockholders' equity = 25000*100/225500 = 11.09%

so answer is c) 11.09%

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