Nicco Corporation Had the Following Accounts at January 1, 2013

question 68

Essay

Nicco Corporation had the following accounts at January 1, 2013:
common shares, unlimited number of shares authorized, 18,000 shares issued, $180,000;
preferred shares, $4 cumulative, unlimited number of shares authorized, 1,000 shares issued, $50,000;
retained earnings, $223,000.
The company has profit of $79,000 in 2013 and paid $85,000 in dividends.
Instructions
a. Calculate the return on equity at December 31, 2013.
b. What does this ratio tell you about the corporation?

---

Definitions:

Retained Earnings

Cumulative net income of a company that is retained within the business rather than distributed to shareholders as dividends.

Cost of Goods Sold

The total cost directly associated with producing goods, including materials and labor expenses, that a company sells during a specific period.

Collections

The process of recovering amounts owed to a business by its debtors or customers.

Net Income

Net income is the total profit of a company after all expenses, taxes, and costs have been deducted from total revenue.