At the beginning of the year, the net assets of Africa Graphite Corp. were $372,

ID: 2633233 • Letter: A

Question

At the beginning of the year, the net assets of Africa Graphite Corp. were $372,600. The only transactions affecting owners' equity during the year were net income of $40,500 and dividends of $17,000. Required: Calculate Africa Graphite Corp.'s return on equity (ROE) for the year. (Round your answer to 2 decimal place. Omit the "%" sign in your response.) At the beginning of the year, the net assets of Africa Graphite Corp. were $372,600. The only transactions affecting owners' equity during the year were net income of $40,500 and dividends of $17,000.

Explanation / Answer

Hi,

Please find the detailed answer as follows:

Owner's Equity at Year End = Opening Net Assets + Net Income - Dividends = 372600 + 40500 - 17000 = 396100

Return on Equity = Net Income/Owner's Equity at Year End*100 = 40500/396100*100 = 10.22%

Answer is 10.22%.

Thanks.

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At the beginning of the year, the net assets of Africa Graphite Corp. were $372,

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