Question

the following selected information pertains to wilson company. total assets: $400; total liabilities: $220; operating income: $60; income from continuing operations: $55; net income: $50. the company's return on shareholders' equity expressed as a percentage is

Answer 1

The return on shareholders' equity for Wilson Company is calculated by dividing net income by shareholders' equity and then converting it to percentage. The shareholders' equity is $180, and with a net income of $50, the return on equity is 27.78%.

Step-by-step explanation:

The question involves calculating the return on shareholders' equity for Wilson Company. To find this value, we first need to determine the shareholders' equity by subtracting total liabilities from total assets. Using the following information: Total Assets - $400 and Total Liabilities - $220, we calculate shareholders' equity to be $400 - $220 = $180. To calculate the return on shareholders' equity, we divide the Net Income, which is $50, by the shareholders' equity ($180), then multiply by 100 to convert it to a percentage:

Return on Shareholders' Equity = (Net Income / Shareholders' Equity) × 100

Return on Shareholders' Equity = ($50 / $180) × 100

Return on Shareholders' Equity = 27.78%