The 2017 balance for Mason Electronics reported the following items — with 2016 figures given for comparison
Mason Electronics
Balance Sheet
As of December 31,2017 Mason Electronics
Balance Sheet
As of December 31,2016
Total Assets $571,000 $494,000
Total Liabilities 330,000 284,000
Total Stockholders'
Equity (all common) 241,000 210,000
Total Liabilities and
Stockholders' Equity $571,000 $494,000
Net income for 2016 was $25,000. Compute the rate of return on common stockholders' equity for 2016. (Round to two decimal places. Show your computations.)
A) 4.38%
B) 10.37%
C) 11.09%
D) 4.69%
C .C) Rate of return on common stockholders' equity:
(Net income - Preferred dividends) / Average common stockholders' equity
($25,000 - 0 ) / ($241,000 + $210,000 ) / 2
$25,000 / $225,500 = 11.09%
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