Ac motors has net income of $51,750, total assets of $523,400, total debt of $267,000, and total sales of $491,300. what is the return on equity?

= 20.18%

Explanation:

The return on equity for AC Motors is simply calculated as follows

Return on Equity (ROE)= Net Income/ Equity x 100

Equity = Total Assets - Total debt

Equity = $523,400- $267,000= $256,400

ROE therefore, = Net Income ($51,750)/ Equity ($256,400)

= (51,750/256,400) x 100

= 20.18%

Return on Equity is simply the measurement of the financial performance of an organisation by looking at the ratio of net income to equity (shareholders fund) at a particular point in time.

The equity is a derived figure by simply deducting total debts from the total assets for that period.

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