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25 February, 13:04

Nestor's has net income of $315,000, total sales of $3.52 million, total assets of $4.4 million, and total equity of $1.98 million. What is the return on equity?

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  1. 25 February, 13:59
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    15.91%

    Explanation:

    The computation of the return on equity is shown below:

    = (Net income - interest expense) : (total equity)

    = ($315,000 - $0) : ($1,980,000)

    = ($315,000) : ($1,980,000)

    = 15.91%

    We simply divide the net income by the total equity so that the return on equity could be calculated

    It is always expresses in percentage form.
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