Question

ABC reports net income and sales for the year of $65,000 and $1,300,000, respectively. Return on equity is 10%. What is ABC's average Stockholders' Equity for the year?

Answer 1

ABC's average Stockholders' Equity for the year is $650,000

Step-by-step explanation:

Return on Equity = Net income / Average Equity

Hence, average equity = 65,000 / 10%

= $650,000