A Company Has Net Income of $5

question 38

Multiple Choice

A company has net income of $5.6 million. Stockholders' equity at the beginning of the year is $32.55 million and, at the end of the year, it is $38.15 million. The only change to stockholders' equity came from net income. The ROE ratio is approximately:

• A) 1.15.
• B) 0.16.
• C) 0.87.
• D) 6.64.

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Definitions:

Consideration

The value promised to be transferred in a contract, making it legally binding.

Endorse

To give one's public approval or support to someone or something, or to sign a document thus validating it.

Bill of Exchange

A written, unconditional order by one party directing another party to pay a specified sum of money to a third party on demand or at a set date.

Call for Tenders

A formal invitation to suppliers to bid on supplying goods or services under specified conditions.