Explain the significance of the return-on-equity ratio. Who (what category or type of financial statement users) would normally be most interested in this ratio, and why?
What will be an ideal response?
The return-on-equity ratio measures the relationship between net income and stockholders' equity. The stockholders would normally be most interested in this ratio because it measures how well the company is using their investment to earn income.
You might also like to view...
The declaration of a stock dividend decreases a corporation's stockholders' equity and increases its liabilities
a. True b. False Indicate whether the statement is true or false
The detailed records of purchases and sales maintained under the perpetual inventory system make which costing method more practical than when a periodic system is used?
A) Specific identification B) Average-cost C) LIFO D) FIFO
Chronologically, the last part of the master budget to be prepared would be the
a. pro forma financial statements. b. cash budget. c. capital budget d. production budget.
A company purchased mining property for $4,875,000 containing an estimated 15,000,000 tons of ore. In Year 1, it mined 689,000 tons of ore and in Year 2, it mined 935,000 tons. Calculate the depletion expense for Year 1 and Year 2 and determine the book value of the property at the end of Year 2.$4,875,000/15,000,000 tons = $0.325 per tonYear 1: 689,000 tons * $0.325 per ton = $223,925Year 2: 935,000 tons * $0.325 per ton = $303,875
What will be an ideal response?