Exercise 242 (Part Level Submission) Mann Corporation decided to issue common st

Question

Exercise 242 (Part Level Submission) Mann Corporation decided to issue common stock and used the $120,000 proceeds to retire all of its outstanding bonds on January 1, 2017. The following information is available for the company for 2016 and 2017 2017 2016 $120,000 $100,000 Average stockholder's equity 1,000,000 800,000 1,200,000 1,200,000 100,000 100,000 60,000 480,000 Net income Total assets Current liabilities Total liabilities ? (a) compute the return on common stockholders' equity for both years. (Round answers to 1 decimal place, eg, 10.2%.) 2016 Return on common stockholders' equity

Explanation / Answer

Return on common stockholder's equity = Net income*100/average common stockholder's equity

2017 2016 Return on common stockholder's equity 120000*100/1000000 = 12% 100000*100/800000 = 12.5%

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