SIE Exam Question 199: Answer and Explanation

Question: 199

Net profit after taxes:	$18,000	Stockholder's Equity:	$170,000
Total revenues:	$615,000	Preferred dividends:	$5,000
Total assets:	$340,000	Number of common shares outstanding:	3,800
Current assets:	$280,000	Current liabilities:	$85,000
Earnings per share:	$4.75	Market price:	$49.50

What is the return on equity (ROE)?

• A. 2.92 percent
• B. 5.29 percent
• C. 10.42 percent
• D. 10.59 percent

Correct Answer: D

Explanation:

The return on equity (ROE) is 10.59 percent.